Top pro golfer Phil Mickelson was charged with insider trading today (May 19) in a Securities and Exchange Commission complaint that will be tried in federal court in the Southern District of New York.
The primary defendants in the case are William T. (Billy) Walters, a Las Vegas–based professional sports gambler and friend of Mickelson; and Thomas C. Davis, a director of Dean Foods.
Mickelson and two others are named as relief defendants, or someone who has received ill-gotten funds as a result of illegal acts committed by other named defendants.
Mickelson, reportedly an inveterate gambler on the course, has been linked to insider trading in Dean Foods for some time. In 2014, the New York Times reported that Mickelson was under investigation for insider trading in Clorox stock. When that proved to be untrue, the Times recanted its story but reported that Mickelson and Walters were under investigation for trades in Dean Foods.
According to the SEC's complaint, Walters on several occasions provided Davis with funds of almost $2 million.
The complaint states that in July of 2012, Walters called Mickelson, who had previously placed bets with Walters. Mickelson allegedly owed Walters money at the time. Walters is said to have told Mickelson to buy Dean stock. About a week later, Dean stock zoomed 40 percent, giving Mickelson a profit of $931,000, according to the complaint. Mickelson allegedly repaid Walters partly from the money he made on the Dean trade.
From 2008 to 2012, Davis allegedly gave Walters inside information on Dean. This time, the tip was based on Dean Foods preparing to spin off a profitable operation.
The complaint says Mickelson is a resident of Rancho Santa Fe. In the past, Mickelson has threatened to leave California because of its high taxes; he also put the Rancho Santa Fe home up for sale. Apparently, he did not follow through on either of these actions.
At times in the past, Walters's purchases of Dean stock ranged from 29 to 37 percent of average daily volume in the stock. According to the complaint, Walters bought or sold Dean stock several times after getting tips from Davis.