Golfer Phil Mickelson to forfeit nearly US$1m in SEC case
Phil Mickelson has agreed to forfeit nearly US$1 million that authorities say was unfairly earned on a stock tip from a professional gambler, part of an insider trading probe that resulted in two arrests, but spared the wealthy pro golf star from facing criminal charges.
The Securities and Exchange Commission and US Attorney Preet Bharara announced an indictment on Thursday against the gambler, William Walters, and a former corporate board member of Dean Foods Co, Thomas Davis, alleging that the pair used non-public information about the company to make tens of millions of dollars in illicit stock trades between 2008 and 2012.
In 2012, the SEC says, Walters called Mickelson, who owed him money, and urged him to trade stock of the Dallas-based distributor of Land O Lakes butter and other dairy products. The SEC says Mickelson made the trade the next day and reaped a profit of US$931,000 that he used to help pay off the debt.
"Simply put, Mickelson made money that wasn't his to make," Andrew Ceresney, head of the SEC's Enforcement Division, said at a Manhattan news conference.
Mickelson was named as a "relief defendant" in the case, meaning he was only accused of profiting from the crimes of others and not forced to admit any wrongdoing. Ceresney declined to spell out the rationale for not making him part of the criminal case, other than, "We bring charges based on the evidence and the law."
The case comes in the wake of a 2014 appeals court decision that made prosecuting people benefiting from inside tips more difficult. The ruling found that in order to be charged, there must be evidence a defendant had first-hand knowledge about the origins of the inside information.
Mickelson's management group issued a statement Thursday saying that he felt "vindicated" because prosecutors hadn't charged him with breaking securities laws. It added: "He takes full responsibility for the decisions and associations that led him to becoming part of this investigation."
Davis, 67, who resigned from Dean Foods' board of directors last year, has already pleaded guilty in the case and is cooperating with the investigation, Bharara said at the news conference. Walters, 69, was arrested by the FBI in Las Vegas on Wednesday. He was scheduled for arraignment Thursday afternoon in US District Court in Las Vegas.
In a statement, defence attorney Barry Burke called Walters - a multimillionaire who owns several golf courses and auto dealerships - "an American success story". The accusations, he added, "are based on erroneous assumptions, speculative theories and false finger-pointing".
Davis' attorney, Christopher Clark, confirmed his client was cooperating, but declined further comment.