SHADY TRADING SCHEME LANDS PGA’S MICKELSON IN THE ROUGH
Phil has been known to take gambles, but this time it backfired on him
A decade ago or so, Ford built an entire ad campaign asking the question: “What will Phil do next?”
It was amusing, and had the usual shelf life of TV commercial runs, but the question was being asked long before the ad agency came up with the idea. It probably will be asked until Phil Mickelson retires, and maybe even after that.
Why? Essentially, the man is a wealthy dingbat. Not a knucklehead, by any means, but … an adventure.
At the moment, though, the only headlines Mickelson is making have to do with “What did Phil do last?”
The answers are: “Won a PGA Tour event three years ago” and “Has to repay more than $1 million gained illicitly through an insider-trading scheme.”
Admittedly, the latter falls outside the dingbat category.
Mickelson owed a renowned professional gambler, Billy Walters, a significant sum of money for lost bets, and invested $2.4 million in late July of 2012 based on a tip from Walters about an upcoming food company spinoff that ended up boosting the stock price by 40 per cent.
In a span of 10 days between buying and selling, Mickelson made $931,000, which he used to pay back his debt to Walters. Now he must repay the Securities and Exchange Commission, plus $105,000 in interest.
The only reason he’s not facing criminal charges is because federal courts have tied the hands of prosecutors by ruling there must be proof the recipient of the tip knew it was the result of insider trading and not just a friendly, “Hey, here’s a stock you should look at.”
According to the SEC, Mickelson’s total investments in stock at the time amounted to $250,000, so it’s somewhat of an affront to credibility to think sinking $2.4 million into a single trade wasn’t based on a sure thing.
Walters and the man he got the inside scoop from, former Dean Foods chairman Thomas Davis, who was also in debt, have been indicted for insider trading, but the SEC said Mickelson was named as a “relief defendant,” accused only of profiting from the misdeeds of others. Relief is the operative word. “The complaint does not assert that Phil Mickelson violated the securities laws in any way. On that point, Phil feels vindicated,” read a statement by his legal adviser, former White House counsel Gregory Craig.
Mickelson’s penalty is a pittance compared to his net worth which, even with his gambling losses, is well into the hundreds of millions. He earned $51 million last year alone, according to Forbes, and only $2.8 million of that was prize money; the rest was from endorsements. He hasn’t won on the PGA Tour since the 2013 Open Championship, his fifth major, but has career earnings of $79.5 million, and if he made $48 million-plus in endorsements in the middle of a three-year drought, he’s been raking it in on that side for a very long time.
This is one of those rich-get-richer schemes that got thwarted because it was too good to be true, which is kind of The Phil Mickelson Story in one sentence.
He has been, from the tales of his precocious childhood to his PGA Tour win as a college junior to his boundless generosity with autograph-seekers to his humour-laced quotability in press rooms, a bona fide PGA Tour treasure.
He showed up at Augusta one year with two drivers in his bag, and won. He did the same playing with five wedges at Colonial. He is just that quirky.
At one point, he said he might give up the game because his tax burden was too great. Poor Phil.
A gambler on the course as well as off, his career was stalled for years by ridiculous risks, numskull club and shot selections — “I’m such an idiot,” he said, after blowing the 2006 U.S. Open — and punctuated by a famous feud with Tiger Woods, which, in retrospect, may have put him on the side of the angels.
Through it all, he has been one of the most popular players in the game, beloved by the public even when (or possibly because) he failed so spectacularly.
What will Phil do next? Well, first he has to survive a review by the PGA Tour, which has rules against associating with “persons whose activities, including gambling, might reflect adversely upon the integrity of the game of golf” — although the Tour’s record for disciplining transgressors is pretty weak.
He has already received assurances from most of his major sponsors, which include KPMG, Rolex, Barclays, Amgen, Exxon Mobil and Callaway, that they will stand by him.
“Phil understands and deeply respects the high professional and ethical standards that the companies he represents expect of their employees, associates and of Phil himself,” a statement from Mickelson’s representatives said. “He subscribes to the same values and regrets any appearance that, on this occasion, he fell short. “
Mickelson has found himself in bad lies before. His forte is the recovery shot. He’s already started his backswing.