Golfer Phil Mickelson made nearly $1 million from an illegal tip he received in July 2012, the Securities and Exchange Commission (SEC) said in a complaint filed Thursday.
The SEC claims that the three-time Masters champion received the tip from sports gambler Billy Walters, to whom the golfer owed money. According to court documents, the SEC alleges that Walters received the insider information from Dean Foods chairman Thomas Davis, who also owed him money, and then passed the tip along to Mickelson.
The SEC wants Mickelson to return “all ill-gotten gains in the form of illicit trading profits.
Davis and Walters face separate criminal charges brought by federal prosecutors.
“In exchange for insider trading tips, Walters helped Davis with his financial problems by, among other things, providing Davis with almost $1,000,000,” the SEC said in the civil complaint. “In April 2010, Walters arranged for a friend to provide Davis with $625,000. In November 2011, Walters provided Davis with an additional $350,000, money Davis needed to repay certain debts.”
Mickelson then purchased a $2.4 million stake in Dean Foods, which helped him turn a $931,000 profit, the SEC alleges. Up to that point, Mickelson owned less than $250,000 in securities and had never previously invested in Dean Foods, according to the complaint.
“At a time when Walters was in possession of material non-public information regarding Dean Foods, Walters communicated with Mickelson and urged Mickelson to trade in Dean Foods stock, which Mickelson did the next trading day in three brokerage accounts he controlled,” the SEC complaint continued. “About one week later, Dean Foods’s stock price jumped 40 percent.”
The case is before the U.S. District Court for the Southern District of New York.