Golfer Phil Mickelson has found himself in the headlines on what is emerging as another high-profile insider trading investigation. While ex-chairman of Dean Foods, Tom C. Davis, and Las Vegas gambler, William Walters, have been charged by U.S. prosecutors with insider trading, Mickelson, known to be a close associate, has only been named as a \u201crelief defendant\u201d in the Securities and Exchange Commission\u2019s complaint\u2014meaning he has been declared an \u2018inadvertent recipient of illicit gains\u2019 from a 2012 investment in Dean Foods shares.<\/p>\n
High-profile insider trading episodes are nothing new. Martha Stewart, who became a household name as one of the nation\u2019s matriarchs of homemaking, was found guilty of insider trading in 2004 as she sold off shares of ImClone Systems, upon receiving insider information of the FDA\u2019s disapproval of a crucial ImClone drug.<\/p>\n
Mickelson\u2019s case is quite different from Martha Stewarts, though, as he has been exonerated of explicit insider trading. There is, however, an implication of some level of guilt in the case. Mickelson is complying with the SEC\u2019s directive to hand over $1.03 million earned (in profits plus interest) from his 2012 trading in Dean Foods securities. These profits were allegedly part of an unlawful arrangement between Walters and Davis that had been running from 2008 through 2014.<\/p>\n
According to authorities, Walter would facilitate business opportunities, capital and loans amounting to almost $1 million for Davis, in exchange for insider tips on Dean Foods\u2019 performance and prospects. Since Walters was allegedly privy to a soon-to-be-announced Dean Foods spin-off in 2012, he urged Mickelson to buy Dean\u2019s share when the golfer owed Walters some money. Mickelson did so from three brokerages the next day and, soon after, made a $931,000 in profits as shares bumped up 40 percent a week later (this following announcements of Dean Foods\u2019 strong earnings and the company\u2019s spin-off of The WhiteWave Foods Company subsidiary)\u2014as noted in the SEC complaint.<\/p>\n
Bottom Line for Investors<\/strong><\/p>\n Barring the payback of profits, Mickelson is largely off the hook for now. The non-celebrity takeaway here is the seemingly adjusted definition of insider trading. In 2014, there was a case in which a federal appeals court overturned a fund manager\u2019s (Newman) conviction and therefore set the stage for new limits to convict someone. These limits included a deeper level of knowledge that he\/she must be proved to have known about the source of the insider tip. In spite of the huge capital gain Mickelson earned, it appeared he lacked deep knowledge of why exactly he was buying Dean Foods. To him, it was just a stock tip and not an insider tip, allegedly.<\/p>\n \n","protected":false},"excerpt":{"rendered":" Golfer Phil Mickelson has found himself in the headlines on what is emerging as another high-profile insider trading investigation. While […]<\/p>\n","protected":false},"author":1,"featured_media":4124,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,72],"tags":[],"class_list":["post-3261","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investor-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/3261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=3261"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/3261\/revisions"}],"predecessor-version":[{"id":11344,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/3261\/revisions\/11344"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=3261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=3261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=3261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}