SEC Vs. Phil Mickleson

By John Lawrence Allen, Special for USDR


Champion golfer Phil Mickelson is under investigation for insider trading stemming from an investment he made back in 2011. According to reports, the Federal Bureau of Investigation and the Securities and Exchange Commission (SEC) believe that Mickelson received a tip on Clorox from billionaire investor Carl Icahn, days before Icahn announced a takeover bid for the company, which consequently drove up stockprices.

While the timing of the trades may create suspicion, it hardly amounts to evidence. The SEC is once again fishing for information and publicity. The high-profile probe is merely a ploy by the SEC to gain exposure for the agency. In order to bolster their image, the SEC pursues high profile individuals to paint a picture of an aggressive government agency. They are anything butaggressive.

Celebrities and high profile corporate types make great targets because the publicity surrounding an investigation is a deterrent to future insider trading. Whether or not the SEC obtains a conviction or gets back the “ill-gotten gains”, the damage has been done. From another perspective, put yourself in the shoes of an SEC investigator. Sure seems kind of boring, digging through reams of trades, hundreds of stocks and thousands of names. It must be a lot more fun when a household name pops up. Wouldn’t you like to “take down” a big name? You might even get apromotion.

Last year, the F.B.I. pulled Mickelson off of a flight at Teterboro Airport, and again approached him publicly while at a golf tournament in Ohio a few weeks ago. No doubt, they considered him a high risk of flight. After all, he sure must be hard to find, playing in all those golf tournaments around theworld.

On the other hand, when the SEC went after Martha Stewart for insider trading, they caught her dumping shares of ImClone Systems after she got a tip that ImClone CEO Sam Waksai was trying to dump his own shares. But instead of saying “oops I’m sorry,” she tried to cover it up. She was convicted of obstruction of justice and lying to investigators, comparable to committing a felony to cover up a parkingticket.

According to reports, there is no connection between Icahn and Mickelson, and Icahn boasts an unblemished 50 year-record of investing. Based upon highly circumstantial evidence, they are pursing what appears to be a baseless insider trading case against a celebrity golfer. Why would the SEC do this? Because they are a watchdog agency without any teeth and they need to have the appearance of aggressively pursuing securitiesviolators.

The enforcement division of the SEC is understaffed, under budget, and under lax leadership. They have always believed that they get the biggest bang for their buck by pursuing high profile targets. To prove insider trading, the SEC would have to show that a person with a fiduciary duty to the source of the non-public information (Icahn for example) passed the non-public information on to another party and that other party (the tipee) acted on that non-public information knowing that the information was not public. Sound easy toprove?

John Lawrence Allen represents investors nationwide in securities arbitration, and is the author of the new book, Make Wall Street Pay You Back. If you believe that you have been defrauded or received bad investment advice, visit his website at MyBrokerFraud.com or email him atjlallen@MakeWallStreetPayYouBack.com

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.

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