Professional golfer Phil Mickelson agreed to return the profits he made from trading in the shares of Dean Foods (NYSE:DF) based on inside information about the company.
William “Billy” Walters, a professional gambler shared inside information about Dean Foods to Mickelson and convinced him to trade the company’s shares in 2012. He gained almost $1 million from the trade.
Walters regularly obtained information about the company from Thomas Davis, the former Chairman of Dean Foods. The Securities and Exchange Commission (SEC) filed insider trading charges against Walters and Davis while the U.S. Attorney’s Office for the Southern District of New York filed criminal charges against them.
Mickelson was named relief defendant
The SEC named Mickelson as a relief defendant. The regulator explained, “Relief defendants are not accused of wrongdoing but are named in SEC complaints for the purposes of recovering alleged ill-gotten gains in their possession from schemes perpetrated by others.”
A statement from Mickelson’s lawyer Gregory Craig said his client “feels vindicated” and reached an agreement with the SEC to return all the money. He said, “Phil has no desire to benefit from any transaction that the SEC sees as questionable.”
Walters made $40 million on insider trading
According to the SEC, Walters made $40 million in illegal profits from trading the shares of Dean Foods based on information obtained from Davis.
The regulator alleged that Davis regularly shared market-moving information about Dean Foods with Walters. He uses prepaid cellphones and other methods to avoid detection. The SEC also alleged that Walters gave Davis almost $1 million and other benefits to him address his financial debts.
Andrew Ceresney, director of Enforcement Division of the SEC, said, “As we charge in our complaint, Walters illegally reaped tens of millions of dollars with the benefit of the ultimate ace in the hole – confidential information leaked by a sitting board member of a public company.”
“Mickelson will repay the money he made from his trading in Dean Foods because he should not be allowed to profit from Walters’s illegal conduct,” added Ceresney.