Gambling and golf go together like peanut butter and jelly. It’s not unusual for many dollars to exchange hands over the course of 18 holes. That doesn’t change just because you’re a professional golfer. Only the amount of money does. 

That sets up the insider trading allegations that briefly engulfed professional golfer Phil Mickleson. Although Mickleson was not convicted of insider trading, the case serves as a cautionary tale. In this case, the question of insider trading centers around a tip Mickleson received about Dean Foods.

What Happened?

Anybody that follows professional golf knows that Phil Mickleson is not shy about placing bets. An expose in Golf World details Mickleson’s relationship with Las Vegas investor and renowned sports gambler, Billy Walters. According to the article sources familiar with Walter’s practices say he operated as an informal bookie for Mickleson. 

However Walters was also friends with Tom Davis, a board member at Dean Foods and an avid, albeit not very successful gambler. As the article relates, both Walters and Davis were having financial difficulty in 2011 and began an insider trading initiative that was happening in plain sight. Of course, as a board member of Dean Foods, Davis knew he was breaking the law by sharing confidential information with Walters.

Where does Mickelson fit in? As the story goes, in 2012, Mickleson was indebted to Walters for sports betting. Davis knew that Dean Foods was planning a spin-off and suggested that Mickleson purchase shares of the company. On that advice, Mickleson purchased $2.4 million of the company’s stock and was able to sell it for $931,000 profit. 

How was the fraud discovered?

The investigation into the suspect trading activity with Dean Foods was part of a major crackdown on insider trading by federal prosecutors. In this case, prosecutors first approached Davis. For the better part of a year, Davis maintained his innocence of insider trading, even lying under oath to the Securities & Exchange Commission. 

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However as Davis’ health and business were failing in 2015, he confessed to 12 counts of insider trading including lying to the SEC and FBI. Furthermore, he agreed to cooperate as the FBI investigated Walters.

This led investigators to the trading activity involving both Walters and Mickleson. But the new question came down to what could the investigators prove? And this is where things get complicated?

In 2014, the United States Second Circuit Court of Appeals threw out an insider trading conviction involving a gentleman, Todd Newman, who had received inside information second-hand. This meant that Newman was one individual removed from the corporate inside (i.e. the tipper). 

This paved the way for Mickleson’s defense. That is that Mickelson who was separated from Davis by Walter did not have evidence of Davis’ motivations. Therefore based on the Newman case, Mickleson could not be charged. 

What Were the Consequences For Phil Mickleson?

Mickleson was named as a “relief defendant” in the SEC case. This meant that he was cited for “benefiting from wrongdoing” but was not accused of an illegal act. 

Although never charged for insider trading, Mickleson was ordered to pay the SEC over $1 million for profit he made on the stock tip. This amount was equal to the profit Mickleson made from the stock trade plus a $105,000 interest penalty. 

At the press conference to announce the penalty, Andrew Ceresney, director of the SEC’s enforcement division remarked, “Simply put, Mickleson made money that wasn’t his to make.”


Like other inside trading allegations, the case surrounding Mickleson goes to show how difficult it can be to prove an act of insider trading. And the job for prosecutors has become more difficult in a case like Mickleson’s where the individual in question is not directly linked to the corporate insider. 

Further complicating the matter is that, in 2016, the U.S. Supreme Court rejected the Newman rule which means that if the trading activity were to have happened today, Mickleson would likely face prosecution for insider trading.