The Securities and Exchange Commission has filed a civil suit today against notoriously successful sports gambler William Walters and the former director of Dean Foods, Thomas Davis for engaging in insider trading. Phil Mickelson was also named because he was involved in a scheme to repay gambling debts to Walters based on a tip he received from Walters himself.
In 2012, the SEC says, Walters called Mickelson, who owed him money, and urged him to trade Dean Foods stock. The SEC says Mickelson did so the next day and made a profit of $931,000. The SEC also sued Davis and Walters, accusing them of "repeated and very profitable insider trading" by Walters based on tips he received from his long-time friend Davis. The agency is seeking injunctions and fines against them.
Mickelson was not actually accused of insider trading, merely profiting from Walters's and Davis's insider trading. Nevertheless, the SEC wants all three to return "all ill-gotten gains" from the tips. Mickelson has since entered into an agreement where he will return all the money he made on the trade because, according to a statement from his management group "Phil has no desire to benefit from any transaction that the SEC sees as questionable."
Mickelson, a notorious gambler himself, was first approached by FBI agents about the trading as he was walking off the course at the Memorial Tournament in Dublin, Ohio in 2014. He said at the time he did nothing wrong and was happy to help the FBI.
The SEC also filed criminal charges against Walters and Davis, alleging that the two friends have been sharing information since at least 2008, and that Walters earned illegal profits and avoided nearly $40 million in losses thanks to confidential information from Davis on Dean Foods. Davis stepped down as director of Dean Foods last year as reports of the insider activity began circulating and has already pleaded guilty.