According to a story on Friday in the Wall Street Journal, golfer Phil Mickelson is the subject of a probe into insider trading by the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC). The two agencies are investigating whether any improper trading tips were exchanged between Mickelson, 78-year-old billionaire Carl Icahn, and Las Vegas sports gambling icon Billy Walters.
The WSJ reports that the investigation is centering on activity during the past three years, and whether Walters acted on any tips he received from Icahn regarding investments made by Icahn’s companies. Mickelson’s involvement seems to be limited to being passed a tip from Walters somewhere down the line of communication. The transaction which is attracting the main focus in the investigation happened three years ago. At that time, Clorox stock jumped in price when Icahn made a $10.2 billion offer for the company.
In an NBC/Golf Channel report on the incident which aired Friday night, Icahn was quoted as saying that, even though he knows who Mickelson is, he does not know him personally. Glenn Cohen, Mickelson’s lawyer, responded to the rumors in the WSJ report by saying he had talked to an FBI agent who told him Mickelson was not the target of any investigation. The FBI refused to comment on Cohen’s statement. Icahn was quoted in the WSJ as saying he did not know of the investigation, and added that his company is “always very careful to observe all legal requirements” in their dealings.
FBI agents reportedly spoke to Mickelson on Thursday after his first round im the Memorial Tournament in Dublin, OH. Mickelson reportedly referred the agents to his attorney. It must have been the icing on the proverbial cake for Mickelson, who was coming off of round in which he lost five shots to par over the final three holes to finish at even par for the day. If there were any lingering effects from the FBI inquiry on Friday, he did not show it. Phil had a stellar second round, recording five birdies and three bogeys en route to a 2-under par 70. He is 10 strokes behind leader Paul Casey heading into play on the weekend.
If both Mickelson’s and Icahn’s camps deny any knowledge in the case, there is even less from Walters. Reached by phone by the WSJ, Walters simply said “I don’t have any comment about anything.”
There has been, evidently, a fierce focus by the U.S. Government to crack down on insider trading in the past five years. Since 2009, out of 90 people charged, there have been 85 convictions in Manhattan Federal court. Five cases are still pending and there have been no acquittals.
Mickelson, Icahn and Walters are certainly the highest-profile names to come to the forefront since the government began their increased focus on cases of insider trading. It should be noted that, right now, this is only an investigation into suspicious trading, and there is no indication that any charges will be filed. It is speculated that increased publicity in this case might hurt investigators’ ability to covertly gather evidence.
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Commentary by Chuck Podhaisky