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Insider Trading Allegations Continue to Dog Phil Mickelson 07/08/2014

Posted by Morse Barnes-Brown Pendleton in Public Companies.
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Corporate Attorney Joseph MarrowBy: Joseph Marrow

As Phil Mickelson prepares to play in the upcoming British Open, he faces additional insider trading allegations (there were previous reports that Mickelson profited from trades involving Clorox, but that investigation allegedly ended without any action). Most recently, federal authorities subpoenaed Dean Foods (Land O Lakes, Garelick Farms and TruMoo brands), a publicly-traded company, about trading activity that closely preceded the announcement of a subsidiary spinoff. Prior to the spinoff, Mickelson and William Walters, a sports gambler and friend of the golfer, placed trades in the shares of Dean Foods. Allegedly, Walters made $15 million in profit and Mickelson made $1 million in profit from the trades. According to reports, the investigation has focused on whether someone inside Dean Foods tipped Walters with material non-public information regarding the proposed spinoff and whether Walters then informed Mickelson.

Insider trading refers to the practice of profiting from the buying and selling of stock in publicly-traded companies through the use of non-public information. In addition, an individual can trip up the insider trading rules by being the “tippee” (recipient) of inside information from a “tipper” (person with access to the inside information). This is the situation purportedly facing Mickelson. Proving insider trading can be very challenging for prosecutors. There has been a noticeable increase in the investigation and prosecution of insider trading cases. Targeting a high profile person like Mickelson may bring more attention to insider trading claims and may serve as a deterrent to individuals considering trading on material non-public information.

For more information on this topic, please feel free to contact Joe.

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