WSJ: Mickelson Subject Of FBI, SEC Insider Trading Investigation
/The Wall Street Journal's Susan Pulliam and Michael Rothfeld reported at around 8 pm. ET Friday night that Phil Mickelson is the subject of a joint FBI, SEC investigation into whether sports gambler Billy Walters and Mickelson traded "traded illicitly on nonpublic information" from activist investor Carl Icahn.
Investigators are examining whether over the past three years Mr. Icahn tipped Mr. Walters—famous in Las Vegas for his sports-betting acumen—about potentially market-moving investments by Mr. Icahn's company. The FBI and SEC are examining whether Mr. Walters on at least one occasion passed a tip on to Mr. Mickelson, these people said, and are studying the two men's trading patterns.
Mickelson's initial response was conveyed by his attorney, Glenn Cohen.
"Phil is not the target of any investigation. Period," said a lawyer for Mr. Mickelson, Glenn Cohen, on Friday, adding that an FBI agent had told him Mr. Mickelson wasn't a target.
And yet...
Two FBI agents approached Mr. Mickelson on Thursday after he finished a round of golf at the Memorial Tournament in Dublin, Ohio, seeking to speak with him in connection with the investigation, a person familiar with the situation said. Mr. Mickelson referred them to his attorney, this person said.
The long version of the story says the investigation has been going for three years and explains the relationship between Icahn and Walters, who met when Icahn built Stratosphere in Las Vegas and sold it in 2008 for $1.2 billion. Walters and Icahn are said to have bonded over poker and betting on football.
Mr. Walters and Mr. Mickelson, 43, play golf together, said people familiar with their relationship. Sometimes Mr. Walters has suggested stocks for Mr. Mickelson to consider buying, one of the people said.
Mr. Mickelson, who has one of the most loyal followings of top professional golfers, has won the prestigious Masters three times.
Mr. Icahn said he didn't know who Mr. Mickelson was.
He has since clarified that dubious statement. A New York Times story, while confusing because of a mistake transposing Walters and Icahn's names, includes a quote saying Icahn knows who Mickelson is but has never met him.
CNBC's Scott Wapner spoke to Icahn and Tweeted a quote from Icahn calling the WSJ story “irresponsible.” He also Tweeted this quote from Icahn: "We've never heard from the FBI and have gotten no subpoenas. We don't know of any investigations."
Wapner also appeared on Golf Channel's special report on the story hosted by Ryan Burr.
The investigation started three years ago over Icahn's failed attempt to take over Clorox.
Well-timed trading around the time of his bid caught the attention of investigators, who began digging into the suspicious trading in Clorox stock, the people familiar with the probe said.
On Wall Street, rumors had swirled that word leaked out ahead of Mr. Icahn's Clorox bid. Large, highly risky trades had been made in Clorox options four days before his bid. After his $76.50-a-share offer was announced, those options soared in value along with Clorox shares, which closed on July 15 up 8.9% at $74.55.
Investigators have examined trades in Clorox options, the people briefed on the probe said.
The story also says an expansion of the investigation centered around Dean Foods.
The investigators expanded their probe to look at trading patterns by Mr. Walters and Mr. Mickelson relating to Dean Foods Co. , said the people briefed on the probe. The FBI, following its approach to Mr. Mickelson on Thursday, expressed an interest in his trading in Dean Foods, a person familiar with the situation said.
Walters has been in the news several times, all golf related. His handicap was questioned after winning the 2008 AT&T National Pro-Am.
He was profiled on 60 Minutes for his gambling operation and it was not a flattering portrayal to most who watched.
Walters successfully sued TravelGolf.com over a blackmail-style quid-pro-quo arrangement concocted by TravelGolf.
Frontline recently took on insider trading investigations on Wall Street and included the tale of a FBI agents getting in line behind a subject and parroting his Starbuck's order, then asking him if he wanted to leave the line and talk.
Mickelson tees off Saturday at 10:27 a.m with Brendon DeJonge.
**According to Jennifer Ablan of Reuters, Mickelson was first approached a year ago at Teterboro.
Federal prosecutors in Manhattan are handling the inquiry in conjunction with the FBI and the SEC, the New York Times reported. Since August 2009, Manhattan U.S. Attorney Preet Bharara's office has convicted 81 people of insider trading, either at trial or via guilty pleas, with no acquittals.
The current investigation made little headway initially, the Times reported. Investigators are searching phone records, seeking to determine whether Icahn had spoken to Walters before the trades, the Times cited anonymous people briefed on the probe as saying.
And about a year ago, FBI officials approached Mickelson at Teterboro Airport in New Jersey, asking the celebrity golfer to discuss his trading, the Times cited its sources as saying.
**Matthew Goldstein and Ben Protess's New York Times story has been cleaned up and tightened, and explains the primary interest related to Mickelson.
In a separate strand of the investigation, federal authorities are looking into trading in Dean Foods that has no apparent connection to Mr. Icahn, the people briefed on the matter said. Mr. Walters and Mr. Mickelson placed the trades around August 2012, according to the people, just before the food and beverage company announced its quarterly earnings and a public offering of stock for one of its subsidiaries. The authorities are investigating whether Mr. Walters had a source inside the company itself — and whether others who know Mr. Walters may have traded on the information as well.
