The Securities and Exchange Commission has filed a civil suit naming Phil Mickelson as a “relief defendant,” accusing the five-time major winner of insider trading.
The suit claims Mickelson made approximately $ 931,000 on Dean Foods stock because of an insider tip from famous sports bettor Billy Walters.
Walters and former Dean Foods board chair Thomas Davis were arrested Wednesday on charges of securities fraud stemming from a multi-year investigation. As part of that investigation, the SEC alleges Walters and Mickelson, who plays golf with Walters, profited in August 2012 from an insider tip that Dean Foods would be announcing a profitable subsidiary, The WhiteWaves Food Company.
Mickelson was not named in the criminal charges. The SEC is suing him to pay back the money he made on his trade of the stock.
The SEC complaint alleges a multi-year exchange of insider information between Walters and Davis, claiming Davis tipped Walters on several occasions from 2008-12 about highly confidential information about Dean Foods, including “sneak previews of at least six of the company’s quarterly earnings announcements.”
Davis resigned his position in August 2015 after he was suspected of being the source of the insider tip to Walters.
The SEC also claims Walters helped Davis with personal financial trouble by providing him with $ 1 million. The money was issued in two installments, used at least in part to pay off a casino debt.
Walters allegedly contacted Mickelson by phone on July 27, 2012, with the spin-off information. The pair also texted the next day. Walters urged Mickelson to trade Dean Foods, which he did by establishing a $ 2.4 million position in the stock through three separate brokerage accounts. Mickelson’s other holdings totaled approximately $ 250,000. A week later, Dean Foods announced the subsidiary, with the stock jumping 40 percent.
The SEC was also investigating if Walters had learned insider information from billionaire investor Carl Icahn about household product maker Clorox. Icahn had been looking to make a takeover bid for the company. That investigation did not yield charges.
The investigation had been public knowledge since May 2014, with Mickelson reportedly approached twice by the FBI looking to speak with the 45-year-old.
Ryan Ballengee is a Yahoo Sports contributor. Find him on Facebook and Twitter.
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