Alleged with engaging in an insider trading scheme that netted more than $40 million and included a tip that benefited professional golfer Phil Mickelson, a former chairman of Dean Foods Co and a professional Las Vegas gambler was charged by U.S. authorities very recently.
William "Billy" Walters was accused in an indictment filed in Manhattan federal court of trading on tips from Thomas Davis, Dean Foods' former chairman. He has also built a multimillion-dollar fortune as a famed Las Vegas sports bettor.
"These bets were no gamble at all. They were sure things," Manhattan U.S. Attorney Preet Bharara said.
Mickelson, who has won three Masters golf titles, was not criminally charged.
Mickelson was named as a relief defendant, not accused of wrongdoing but of receiving ill-gotten gains as a result of others' illegal acts in a civil lawsuit by the U.S. Securities and Exchange Commission.
To resolve claims from his role in the scheme, Mickelson agreed to pay back $1.03 million, including profit and interest.
Mickelson owed Walters money after placing bets with him, said the SEC. Enabling the golfer to earn $931,000 of profit, Walters had urged Mickelson to trade in the company's stock. Walters was aware of a Dean Foods corporate spin-off, the SEC said.
"Simply put, Mickelson made money that wasn't his to make," said Andrew Ceresney, the SEC's director of enforcement.
Based on charges of securities fraud, wire fraud and conspiracy, Walters, 69, was arrested in Las Vegas on Wednesday night. He was released on Thursday on a $1 million bond following a court appearance there.
The allegations were "based on erroneous assumptions, speculative theories and false finger-pointing”, said Barry Berke, Walters' lawyer.
Davis, 67, pleaded guilty on Monday. He had resigned from Dean Foods' board in August.
His client was cooperating in the probe, said Thomas Melsheimer, Davis' lawyer.
In 2014 appellate ruling limited the scope of the applicable laws, a major setback for a high-profile crackdown that began in 2009, these charges marked the most significant insider trading case that Bharara's office has pursued since then. The ability to pursue charges against a defendant who heard a stock tip second- or third-hand that originated with a corporate insider of the authorities were limited by that ruling. Prosecuting someone like Mickelson was made more difficult by it.
Whether the ruling was the reason Mickelson was not charged was not made clear by Bharara.
But the decision "has had an impact on our investigations," allowing some "nefarious conduct" to go unprosecuted, he said.
He noted that the U.S. Supreme Court has agreed to review what constitutes insider trading while he called the ruling "wrongly decided."
The golfer felt "vindicated" the SEC concluded he did not engage in wrongdoing, said Gregory Craig, Mickelson's lawyer.
"At the same time, however, Phil has no desire to benefit from any transaction that the SEC sees as questionable," Craig said.
Information about Dean Foods' financial outlook, earnings and its spin-off of WhiteWaves Food Co were disclosed by Davis to Walters, according to the indictment. After the deal was announced on Aug. 8, 2012, the company's shares had soared.
Walters instructed Davis to use code words, including referring to Dean Foods as the "Dallas Cowboys," using a prepaid cellular phone for passing along inside information secretly that he gave Davis, prosecutors said.
(Source:www.reuters.com)
William "Billy" Walters was accused in an indictment filed in Manhattan federal court of trading on tips from Thomas Davis, Dean Foods' former chairman. He has also built a multimillion-dollar fortune as a famed Las Vegas sports bettor.
"These bets were no gamble at all. They were sure things," Manhattan U.S. Attorney Preet Bharara said.
Mickelson, who has won three Masters golf titles, was not criminally charged.
Mickelson was named as a relief defendant, not accused of wrongdoing but of receiving ill-gotten gains as a result of others' illegal acts in a civil lawsuit by the U.S. Securities and Exchange Commission.
To resolve claims from his role in the scheme, Mickelson agreed to pay back $1.03 million, including profit and interest.
Mickelson owed Walters money after placing bets with him, said the SEC. Enabling the golfer to earn $931,000 of profit, Walters had urged Mickelson to trade in the company's stock. Walters was aware of a Dean Foods corporate spin-off, the SEC said.
"Simply put, Mickelson made money that wasn't his to make," said Andrew Ceresney, the SEC's director of enforcement.
Based on charges of securities fraud, wire fraud and conspiracy, Walters, 69, was arrested in Las Vegas on Wednesday night. He was released on Thursday on a $1 million bond following a court appearance there.
The allegations were "based on erroneous assumptions, speculative theories and false finger-pointing”, said Barry Berke, Walters' lawyer.
Davis, 67, pleaded guilty on Monday. He had resigned from Dean Foods' board in August.
His client was cooperating in the probe, said Thomas Melsheimer, Davis' lawyer.
In 2014 appellate ruling limited the scope of the applicable laws, a major setback for a high-profile crackdown that began in 2009, these charges marked the most significant insider trading case that Bharara's office has pursued since then. The ability to pursue charges against a defendant who heard a stock tip second- or third-hand that originated with a corporate insider of the authorities were limited by that ruling. Prosecuting someone like Mickelson was made more difficult by it.
Whether the ruling was the reason Mickelson was not charged was not made clear by Bharara.
But the decision "has had an impact on our investigations," allowing some "nefarious conduct" to go unprosecuted, he said.
He noted that the U.S. Supreme Court has agreed to review what constitutes insider trading while he called the ruling "wrongly decided."
The golfer felt "vindicated" the SEC concluded he did not engage in wrongdoing, said Gregory Craig, Mickelson's lawyer.
"At the same time, however, Phil has no desire to benefit from any transaction that the SEC sees as questionable," Craig said.
Information about Dean Foods' financial outlook, earnings and its spin-off of WhiteWaves Food Co were disclosed by Davis to Walters, according to the indictment. After the deal was announced on Aug. 8, 2012, the company's shares had soared.
Walters instructed Davis to use code words, including referring to Dean Foods as the "Dallas Cowboys," using a prepaid cellular phone for passing along inside information secretly that he gave Davis, prosecutors said.
(Source:www.reuters.com)
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