Professional golfer Phil Mickelson is being sued by the US Securities and Exchange Commission (SEC) over claims he profited from an insider trading scheme.
The SEC has also alleged in its civil suit that a gambler named William Walters received tips about Dean Foods from the firm’s former director, Thomas Davis, between 2008 and 2012.
The SEC claims Mr Walters called Mickelson, who owed him money, in 2012 and urged him to trade Dean Foods stock. The SEC says Mickelson did so the next day and made a profit of $931,000 (€830,000).
It also sued long-time friends Mr Davis and Mr Walters, accusing them of “repeated and very profitable insider trading”. The agency is seeking injunctions and fines against them.
As a relief defendant, Mickelson is not accused of participating in insider trading, only of receiving money as a result of the scheme.
From 2008 to 2012, the SEC said, Mr Davis passed Mr Walters highly confidential information on Dean Foods, including sneak previews of at least six of the company’s quarterly earnings and advance notice of the spin-off of its profitable subsidiary, WhiteWave Foods.
In 2013, Mr Davis also gave Mr Walters inside information that Mr Davis had received from a group of investors who confidentially shared their plans to buy stock in Darden Restaurants, the SEC said.
Based on the tips, Mr Walters reaped illegal trading profits and avoided losses of at least $40m, according to the regulators.
The SEC said that, on August 8, 2012, Mickelson sold all the Dean Foods shares he had purchased on July 30 and 31, netting him a profit of around $931,000.
The agency wants Mickelson, Mr Davis, and Mr Walters to return “all ill-gotten gains” they received.
Mickelson was not in the field of the Byron Nelson Classic in Irving, Texas, where play began yesterday.
In May 2014, Mickelson confirmed that FBI agents investigating insider trading questioned him as he finished playing a round at the Memorial Tournament in Dublin, Ohio.
Mickelson would not discuss details about his relationship with Mr Walters, a multimillionaire who owns several golf courses and car dealerships. He would not talk about stock tips he received, but reiterated that he did nothing wrong.
“And that’s why I’ve been fully co-operating with the FBI agents, and I’m happy to do in the future, too, until this gets resolved,” he said two years ago.
Mickelson has long had a reputation for being a gambler, though he has said he scaled back his habit after his son was born in 2003.
The most publicised pay-off was when Mickelson and friends won $560,000 on a pre-season bet at odds of 28-1 that the Baltimore Ravens would win the 2001 Super Bowl.
He has a history of playing money games during the practice rounds. He occasionally gets a group of players and caddies together for dinner and small money bets during the basketball and ice hockey play-off games and prominent boxing matches.
A spokesman for Dean Foods said Mr Davis resigned from the board of directors last year and is no longer affiliated with it.
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