Today saw U.S. Attorney Preet Bharara charge former Dean Foods chairman, Thomas Davis, and professional sports gambler William “Billy” Walters with insider trading over the 2013 spinoff of Whitewave Foods.
Professional golfer not charged with former Dean Foods chairman
The two face criminal charges in federal court with today’s indictment, but professional golfer Phil Mickelson was not charged criminally but was named as a relief defendant in a civil lawsuit by the U.S. Securities and Exchange Commission in which it’s believed he benefited financially on trades of Dean Foods owing to “grey” information.
A relief defendant essentially profits from the actions of others but is not accused of any wrong doing. Davis pleaded guilty to the charges on Monday while the 69-year old Walters was arrested in Las Vegas, Nevada, where he built his millions as a legal sports gambler, on Tuesday. .
While each were charged with conspiracy, wire fraud and fraud, Davis was also charged with obstruction of justice and perjury charges unlike Walters.
Gambler denies allegations
Walters’ lawyer, Barry Berke, said that the charges were “based on erroneous assumptions, speculative theories and false finger-pointing.”
That may turn out to be a tough sell to a potential jury with Davis’ guilty plea.
Mickelson issued a statement through his lawyer today saying that he felt “vindicated” and noted that he would be returning all gains made in trading. That, however, may not help his reputation and may threaten present and future endorsements.
The government alleges that from 2008 to 2014 Walters was receiving inside information from Davis, saving himself $11 million in losses as well as illegally making $32 million in trading. While Walters denies it, Davis’ lawyer said that the former Dean Foods chairman was “pleased to be cooperating with the government in its investigation.”
The biggest gains Davis is alleged to have made was ahead of the Whitewave Foods spinoff, which sent shares soaring.
This is not the first time that Walters has been investigated for insider trading. A few years ago, the Federal Bureau of Investigation and U.S. Securities and Exchange Commission launched a probe into Walters questioning whether he had received inside information from Carl Icahn with regards to Clorox.
Mickleson responded with the following press release:
The SEC has now completed its investigation into that investment and has concluded that Phil Mickelson did not engage in any wrongdoing. 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 laws 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. Phil understands and deeply respects the high professional and ethical standards that the companies he represents expect of their employees, associates and of Phil himself. He subscribes to the same values and regrets any appearance that, on this occasion, he fell short. He takes full responsibility for the decisions and associations that led him to becoming part of this investigation.
As he moves forward, Phil remains committed to demonstrating that he fully shares the same values as the companies he represents. He very much appreciates that they have determined to continue their sponsorship agreements with him. He is pleased that this matter is over, and he will have no further comment.”
The cases in the U.S. District Court, Southern District of New York, are U.S. v. Walters, No. 16-cr-338, U.S. v. Davis, No. 16-cr-338, and Securities and Exchange Commission v. Walters, No. 16-cv-03772.