Insider trading charges against the sports gambler Billy Walters will result in Phil Mickelson forfeiting profits he made from a 2012 investment that Walters allegedly suggested.
Mickelson is not facing criminal charges, but he is listed as a "relief defendant" in the charges against Walters and Thomas Davis, the former chairman of Dean Foods. The SEC complaint says Mickelson received text messages from Walters tipping him off to an investment in Dean Foods that yielded a $931,000 profit for the golfer.
According to the SEC document,"Mickelson had placed bets with Walters prior to the tip, and Mickelson owed Walters money at the time of the Dean Food trading. Mickelson repaid Walters in September 2012, in part with the proceeds of his trading."
According to a statement issued by Mickelson's management team, the golfer will return the money.
"The SEC has now completed its investigation into that investment and has concluded that Phil Mickelson did not engage in any wrongdoing," the statement says. "The SEC has filed a civil complaint against certain individuals, including an acquaintance of Phil's, but that complaint does not assert that Phil Mickelson violated the securities law in any way. On that point, Phil feels vindicated.
"At the same time, however, Phil has no desire to benefit from any transaction that the SEC sees as questionable. Accordingly, he has entered into an agreement with the SEC under which he will return all the money he made on that 2012 investment."
In a press conference Thursday afternoon, U.S. Attorney Preet Bhahrara said Walters made $43 million in profits made and losses avoided on Dean Foods thanks to information fed to him by Davis. Bhahrara says Davis pled guilty to charges on Monday, and is cooperating with authorities, while Walters was arrested at a Las Vegas casino Wednesday night.
Here's the text from the SEC filing that details Walters' dealings with Mickelson:
Walters Tips Mickelson, Who Trades in Dean Foods 51. In addition to trading based on the material nonpublic information that he received from Davis, Walters sought to obtain additional benefits by tipping his friend, Mickelson, to buy Dean Foods securities. On Friday, July 27, Walters called Mickelson. The two exchanged text messages later that day, and again on July 28, 2012. 52. On Monday, July 30 and Tuesday, July 31, Mickelson bought, partially on margin, a total of 200,240 Dean Foods shares, a $2.4 million position, in three accounts he controlled. This position dwarfed the other holdings in the brokerage accounts, which collectively were valued at less than $250,000. Mickelson had not been a frequent trader and these were his first ever Dean Foods purchases.