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Tuesday, May 24, 2016

A Final Word About Phil and the SEC

Today is a link to a Golf Digest article by Shane Ryan about the insider trading case that Phil was involved in. Why am I posting this link? Because it does a good job of explaining why Phil didn't get charged -- and why he's extremely lucky that he wasn't.

Phil Mickelson

I'll let you read the original article to get the whole story -- it's well-written and you won't get buried in legal jargon -- but here (in my own words) is the crucial bit of info responsible for Phil's "escape":
In order to protect people who may have gotten insider info without knowing where it came from, the Second Circuit (the U.S. Court of Appeals with jurisdiction over New York and Wall Street) issued a ruling in 2014 which is now known as "The U.S. v. Thomas Newman". This ruling basically says that if a person gets a "stock tip" from someone other than the original source, that person can't be convicted because they didn't necessarily know the tip was illegal info.
Since the original source was Thomas Davis (of Dean Foods), and he gave the tip to gambler Billy Walters, Walters can be convicted of insider trading. But since Phil is one of the folks who got the tip from Walters, he can't be convicted because Walters isn't the original source.

So, since Phil made his trade in 2012 but "U.S. v. Newman" wasn't ruled until 2014, Phil simply got lucky. Period.

And while Phil couldn't be convicted, he was required to pay back the profits he made on the deal, plus interest. Phil didn't "volunteer" to repay the money; he was legally required to repay it.

So, just to be clear, there truly is nothing to indicate that Phil knowingly broke the law. But the fact is this: Innocent or not, Phil is getting off with only paying back the money simply because "U.S. v. Newman" is on the books. Anything you hear to the contrary is just "spin."

And you can rest easy that Phil didn't get off because he's a famous person. You would have gotten off as well, had you been in the same position.

But hopefully you would have been smart enough to avoid that position in the first place. If something seems too good to be true, it usually is... and if you ask me, stock tips from a professional gambler would certainly seem to come under the category of "too good to be true."

The photo came from this page at, which has nothing to do with the insider trading case at all.

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