Wednesday, May 25, 2016
Last week the SEC announced insider trading charges against former-Dean Foods Company board member Thomas C. Davis and professional sports gambler, William “Billy” Walters of Las Vegas. Involved in the case is professional golfer, Phil Mickelson, named as a relief defendant in the case. Davis owed money to Walters and began passing along confidential information first about Dean Foods, and later about Darden Restaurants. Walters passed along his insider knowledge of Dean Foods to Mickelson, who also owed Walters money.
For those unfamiliar,
"the SEC may seek disgorgement from “nominal” or “relief” defendants who are not themselves accused of wrongdoing in a securities enforcement action where those persons or entities (1) have received ill-gotten funds, and (2) do not have a legitimate claim to those funds." S.E.C. v. DCI Telecommunications, Inc., 122 F. Supp. 2d 495, 502 (S.D.N.Y. 2000).
The SEC issued a statement on Friday detailing the alleged wrong doing by all parties and announcing that "Mickelson will repay the money he made from his trading in Dean Foods because he should not be allowed to profit from Walters’s illegal conduct.”
As most insider trading cases are, the facts are fascinating. This would make a great exam hypo, and I am flagging it for my casebook section on insider trading.