Former Eagles linebacker Mychal Kendricks pleaded guilty Thursday to participating in a $1.2 million insider trading scheme.

Federal authorities announced the charges against Kendricks last week. The scheme is tied to investments he made from several years ago, authorities said.

Here's an explanation of insider trading and the alleged deals.

What is illegal insider trading?

The U.S. Securities and Exchange Commission defines it as buying or selling a security — or tipping others off about it — based on information about the security that's not yet public. Here are some general examples of illegal insider trading, according to the commission:

  • Corporate officers, directors and employees who trade the corporation's securities after learning of significant, confidential corporate developments
  • Friends, business associates, family members, and other "tippees" of such people, who trade the securities after receiving such information
  • Other people who misappropriate and take advantage of confidential information from their employers, family, friends and others

What exactly is Kendricks accused of doing?

A federal complaint says TV writer Damilare Sonoiki tipped off Kendricks about at least four corporate acquisitions that a "large investment bank" was advising before the deals were announced to the public. The complaint doesn't name the New York-based bank, but public records show that Sonoiki was a Goldman Sachs analyst.

Using the information from Sonoiki, Kendricks purchased securities of the soon-to-be-acquired companies, making $1.2 million in illegal profits in the process, the complaint said.

The first deal: Compuware Corp.

In July 2014, Sonoiki tipped off Kendricks that the investment bank was advising Compuware Corp., a Michigan-based computer software manufacturer, on a proposed transaction in which a private-equity firm, Thoma Bravo, would take Compuware private, according to court documents.

Shortly after, a brokerage account was opened in Kendricks' name, authorities said, and Kendricks then allegedly put $80,000 into it.

Later that month, Sonoiki learned the deal with Compuware could be announced in mid-August, and he purchased more than 1,000 Compuware call options using the money in Kendricks' account, according to the complaint. (Call options allow the owner to buy a specified amount of an underlying stock at a specified price before a certain date, the assumption being that the value of the stock will go up in the short term.)

In August, Sonoiki purchased more Compuware call options using the money in Kendricks' account, the complaint said. In early September, Compuware's stock price surged after the Wall Street Journal reported on the deal.

The profit: Sonoiki sold all of the Compuware call options he had purchased in Kendricks' account, according to the complaint, netting Kendricks a $78,000 profit. Kendricks gave Sonoiki Eagles tickets in return, the complaint said.

Here's a tick-tock of how the first alleged deal happened. The other trades are described below the graphic.

The second deal: Move Inc.

In September 2014, Sonoiki allegedly learned that a deal would soon be announced involving Move Inc., a California-based corporation that operates real-estate websites like Realtor.com.

Sonoiki texted Kendricks on Sept. 4, "call me asap," authorities said. Days later, Kendricks' account purchased 224 Move call options, according to the complaint. Kendricks, in the midst of the NFL season, soon allegedly enlisted a friend to place trades in the account based on Sonoiki's tips.

Several times that month, Kendricks' account allegedly purchased more Move call options. Kendricks also gave Sonoiki tickets to see the Eagles play the Washington Redskins and, after the game, gave Sonoiki $6,000 in cash, the complaint said. Toward the end of the month, News Corp. and Move announced that News Corp. would acquire all outstanding Move shares, and Move's stock price soon surged.

The profit: Days later, the Move call options in Kendricks' account were sold, netting Kendricks a $279,000 profit, the complaint said.

The third deal: Sapient Corp.

In October 2014, Sonoiki allegedly learned that the investment bank was advising the Sapient Corp., a Boston-based digital advertising firm, on a potential offer by Publicis to acquire the company.

Kendricks' account then purchased more than 1,000 Sapient call options, the complaint said. Sonoiki asked Kendricks for four tickets to the Eagles' game against the New York Giants, and Kendricks provided them, authorities said. Kendricks also paid Sonoiki $4,000 in cash at 30th Street Station that month, according to the complaint. In November 2014, Sapient announced its deal with Publicis, and Sapient's stock price surged.

The profit: The Sapient call options in Kendricks' account were soon sold, netting Kendricks a $489,000 profit, according to the complaint.

The fourth deal: Oplink Communications

In October 2014, Sonoiki allegedly learned that the investment bank was advising Koch Industries about acquiring Oplink Communications, a California-based manufacturer of optical communications. During the next few weeks, Kendricks' account purchased more than 2,000 Oplink call options, according to the complaint. On Nov. 19, Oplink announced its deal, and its stock price soon surged.

The profit: Several days later, the Oplink call options in Kendricks' account were sold, netting him a $352,000 profit, the complaint said.

When did the scheme end?

In May 2015, when authorities say Sonoiki was terminated from the investment bank, and he lost access to confidential information.