Phil Mickelson has been named as a “relief defendant” in a federal lawsuit accusing two other individuals of insider trading.
The Securities and Exchange Commission filed charges Thursday against Thomas Davis, the former chairman of Dean Foods, and noted sports gambler Billy Walters, accusing both of “repeated and very profitable insider trading” tied to the Dean Foods stock.
According to a Reuters report, as a relief defendant Mickelson is not accused of any wrongdoing, but “has received ill-gotten gains as a result of others’ illegal acts.”
According to the lawsuit, Mickelson had a history of placing bets with Walters and owed him money when, in July 2012, Walters called Mickelson and conveyed “material nonpublic information” regarding Dean Foods stock, which he “urged” Mickelson to purchase.
Mickelson did so the following day, purchasing approximately $2.4 million of the stock across three different brokerage accounts. It marked his first-ever purchase of Dean Foods stock, and according to the lawsuit his collective brokerage balances before those transactions was less than $250,000.
The stock in question rose 40 percent approximately one week later on the heels of strong second-quarter earnings, allowing Mickelson to make $931,000 in profit.
SEC chart of alleged activity between Phil Mickelson and sports gambler Billy Walters on insider trading case pic.twitter.com/isFrxsfTY6
— Darren Rovell (@darrenrovell) May 19, 2016
According to the lawsuit, federal authorities requested that Mickelson “disgorge ill-gotten gains and pay pre-judgement interest thereon.” The SEC later confirmed that Mickelson has agreed to pay a total of $1,037,029.81 - the profits, plus interest, for the stock trade in question.
“Phil has not been charged with insider trading,” Mickelson’s lawyer, Gregory Craig, said in a statement. “Phil was an innocent bystander to alleged wrongdoing by others that he was unaware of. Phil is innocent of any wrongdoing. He was only charged as a relief defendant, which means he did not violate, and is not charged with violating, the securities law.”
“The complaint does not assert that Phil Mickelson violated the securities laws in any way. On that point, Phil feels vindicated,” Craig added in a separate statement. “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.”
