FBI & SEC investigating golfer Phil Mickelson for "insider trading"

[Occam's Banana]

They saved us from Martha Stewart's awful depredations & unbridled reign of terror.

Now it looks like they might have the next boogie-man in their sights ...

Teaching the One Percenters a Lesson
https://www.lewrockwell.com/lrc-blog/teaching-the-one-percenters-a-lesson/
Thomas DiLorenzo (01 June 2014)

A couple of years ago the pro golfer Phil Mickelson said in an interview that he was thinking of leaving California, where he was paying around 13 percent in state income taxes (along with myriad other state taxes). He was sick of paying more than 60% of his income in federal, state, and local taxes, he said. He was considering doing what Tiger Woods and many other pro golfers have done — moved to zero-income-tax Florida. The commentators at Huffingandpuffingtonpost went nuts, as did much of the rest of the “mainstream media,” outraged — outraged!! — that anyone would think that he had a right to keep the money he has earned through his own hard work and diligence.

Fast forward a couple of years and we learn over the past two days that the FBI and the SEC have been “investigating” Mickelson (http://online.wsj.com/articles/fbi-sec-probe-trading-of-carl-icahn-billy-walters-phil-mickelson-1401492772), who plays golf once in a while at his home club with a wealthy investor. That investor, and Phil Mickelson, are said to be “under investigation” for “insider trading.”

It is of course important that the FBI investigates all rumors of unfairness on Wall Street for, after all, every single Wall Street investment banker is more moral and ethical than Mother Theresa or maybe even Jesus Christ himself. There is, and never has been, any kind of unfairness, cronyism, or corruption involved with the Fed-fueled enrichment of the Wall Street banksters, thanks to the ever-diligent bureaucrats at the SEC.

[HOLLYWOOD]

lolz... Phil must of donated to the wrong Mafioso party.


Someone ask the FBI and SEC how that Jon Corzine and the missing $1 Billion investigation is going?

http://www.internationalman.com/images/2014/01/mf-global.jpghttp://1.bp.blogspot.com/-bU1Pm6ke2Z0/UBHjqPXhzZI/AAAAAAAAzxQ/PU_maNFxyg0/s400/120726-mf-corzine-obama.jpg

[oyarde]

FBI pd informants , your tax dollars .Effing scum .

[HOLLYWOOD]

FBI pd informants , your tax dollars .Effing scum .What about all these insider traders, you all know, Congress, White House, State Dept., DOD? How's the investigation going on these multimillionaires in lifetime of government leeching inside the Washington DC beltway off of insider deals?

http://www.dirtbagpoliticians.com/wp-content/uploads/2002/12/Congress-Insider-Trading.jpeghttp://newsblaze.com/pix/2011/cartoon/gv2011111118dAPC.jpg

[oyarde]

What about all these insider traders, you all know, Congress, White House, State Dept., DOD? How's the investigation going on these multimillionaires in lifetime of government leeching inside the Washington DC beltway off of insider deals?

http://www.dirtbagpoliticians.com/wp-content/uploads/2002/12/Congress-Insider-Trading.jpeghttp://newsblaze.com/pix/2011/cartoon/gv2011111118dAPC.jpg

I somehow doubt there will be investigations on those insiders .

[HOLLYWOOD]

Oh look who I found changing the Stock Act and Insider Trading by Congressional Members... Congressman Eric Cantor (R-VA) Last paragraph says it all...

http://kwout.com/cutout/s/ni/cs/2uk_bor.jpg

How Congress Quietly Overhauled Its Insider-Trading Law : It's All Politics : NPR (http://www.npr.org/blogs/itsallpolitics/2013/04/16/177496734/how-congress-quietly-overhauled-its-insider-trading-law)

Editorial: Insider trading on Capitol Hill didn't end with 2012 law (http://www.masslive.com/opinion/index.ssf/2013/06/editorial_insider_trading_on_h.html)

[oyarde]

Oh look who I found changing the Stock Act and Insider Trading by Congressional Members... Congressman Eric Cantor (R-VA) Last paragraph says it all...

http://kwout.com/cutout/s/ni/cs/2uk_bor.jpg

How Congress Quietly Overhauled Its Insider-Trading Law : It's All Politics : NPR (http://www.npr.org/blogs/itsallpolitics/2013/04/16/177496734/how-congress-quietly-overhauled-its-insider-trading-law)

Editorial: Insider trading on Capitol Hill didn't end with 2012 law (http://www.masslive.com/opinion/index.ssf/2013/06/editorial_insider_trading_on_h.html)

Cantor , no suprise.

[devil21]

I hope Phil learned from Martha to STFU and not talk to the cops! Remember, she was imprisoned not for insider trading but for lying to the police about what she knew.

[Christian Liberty]

What is insider trading exactly? Is it a form of fraud? I learned about it awhile back but I forget exactly what it is, and I don't remember ever hearing a libertarian theorist address the topic.

[dannno]

What is insider trading exactly? Is it a form of fraud? I learned about it awhile back but I forget exactly what it is, and I don't remember ever hearing a libertarian theorist address the topic.

It's very subjective and kind of bullshit.. But basically because the company is "publicly traded" and the government regulates the trading they want to make it fair and balanced between the investors and stockholders within the company. You aren't supposed to trade your own company's publicly traded stock based on knowledge that you only know because you work there (or know someone who does) and is otherwise not public information..

But what if I worked for a company and was planning on selling some of my stock to buy a house, and right before I sold the stock I found out that my company was going to be selling off some of their holdings in a couple of months and the stock value was expected to drop then? I could be arrested for selling stock I was planning on selling anyway, but because this insider knowledge information just came up, suddenly I can't do what I was planning on doing to begin with.

It is not libertarian, imo.

[Occam's Banana]

What is insider trading exactly? Is it a form of fraud? I learned about it awhile back but I forget exactly what it is, and I don't remember ever hearing a libertarian theorist address the topic.

http://wiki.mises.org/wiki/Insider_trading
(see especially the "Links" section of the entry)

[Zippyjuan]

I hope Phil learned from Martha to STFU and not talk to the cops! Remember, she was imprisoned not for insider trading but for lying to the police about what she knew.

Martha went to jail because of her attitude and lack of cooperation on the issue. Michelson says he is cooperating. My guess is he will pay a fine and say he is sorry (on his income, the amount is very small).

[devil21]

Martha went to jail because of her attitude and lack of cooperation on the issue.

Say what? That is not a criminal charge. Perhaps you should review her convictions. If anything, she cooperated TOO MUCH and ended up screwing herself over. Her best bet would have been to not say a thing and make them prove insider trading.



Michelson says he is cooperating. My guess is he will pay a fine and say he is sorry (on his income, the amount is very small).

Stewart said she was cooperating too.

I haven't seen this posted in a while so here's a reminder.

https://www.youtube.com/watch?v=6wXkI4t7nuc

[dannno]

It's very subjective and kind of bullshit.. But basically because the company is "publicly traded" and the government regulates the trading they want to make it fair and balanced between the investors and stockholders within the company. You aren't supposed to trade your own company's publicly traded stock based on knowledge that you only know because you work there (or know someone who does) and is otherwise not public information..

But what if I worked for a company and was planning on selling some of my stock to buy a house, and right before I sold the stock I found out that my company was going to be selling off some of their holdings in a couple of months and the stock value was expected to drop then? I could be arrested for selling stock I was planning on selling anyway, but because this insider knowledge information just came up, suddenly I can't do what I was planning on doing to begin with.

It is not libertarian, imo.

An even more subjective example of this law being applied would be if I knew somebody who worked for a company and let's say at first they tell me to buy the stock because it is a good company - so I buy the stock. The stock goes up and I make a lot of money and decide to sell the stock to buy a house - except now the person who told me to buy the stock has insider information that the stock is going to go down significantly in the next few weeks. They never told me to sell the stock, but I could still be prosecuted if the FEC found this large sale and my relationship with someone within the company and we could be put under a lot of scrutiny for something that was merely coincidence.

[Feeding the Abscess]

What is insider trading exactly? Is it a form of fraud? I learned about it awhile back but I forget exactly what it is, and I don't remember ever hearing a libertarian theorist address the topic.

Rothbard wrote about it. Block has also discussed it. Bonus, here's Robert Murphy as well:

http://mises.org/econsense/ch50.asp
http://mises.org/daily/5289
http://www.walterblock.com/wp-content/uploads/publications/information_privilege.pdf
http://www.youtube.com/watch?v=m0wvlVvZDtk

EDIT: I had this tab open too long, and Occam posted relevant information well before I did.

[KurtBoyer25L]

I like Phil and I hope he can avoid these silly charges.

The article posted is weird though, it reads like the introduction to a longer one but there's nothing there.

[Zippyjuan]

Say what? That is not a criminal charge. Perhaps you should review her convictions. If anything, she cooperated TOO MUCH and ended up screwing herself over. Her best bet would have been to not say a thing and make them prove insider trading.



Stewart said she was cooperating too.



Bit more detail on the Martha Stewart case:

http://www.seclaw.com/docs/marthastewartindictmentseccivil0603

The truth is, at least according to the indictment, Martha did not illegally trade on insider information, and the facts of the indictment support the conclusion that she did not. It seems clear to me at least, that if the federal prosecutors thought they could win an insider trading case, they would have obtained the indictment. They do not believe they could win, and did not bring the case.

According to the Indictment, ImClone was waiting for FCC comments on its new cancer drug, and the FCC was going to announce its decision by the end of December 2001. This would be a very significant event, and every shareholder in ImClone was anxiously awaiting the announcement.

On December 26, 2001, Sam Waksal learned that the news was not going to be good, and on the morning of December 27, 2001, he called his broker at Merrill Lynch, to sell all of his ImClone stock. At least one of his relatives did the same.

We can assume that this was big news, since there was no announcement from the FCC, and the SEC complaint alleges that there were a number of internal discussions at Merrill Lynch as to whether he could in fact sell his stock. In any event, the broker told his assistant to call Martha and tell her that he had reason to believe that ImClone was going to decline in value. And the assistant made The Call.

Martha received the voicemail message, and called back. According to the Indictment she was told that Sam was selling all of his stock, and you might want to consider doing the same.

And Martha did. She gave an order to sell all of her ImClone stock, all 3,928 shares of it, and received an average price of $58.43. According to the SEC Complaint, in doing so, she avoided losses of $45,673.

The SEC alleges that she immediately called Waksal, and left the following message: "Martha Stewart something is going on with ImClone and she wants to know what…."

Those are the facts according to the SEC and the United States Attorney. It is the prosecutor's version of the story, and we can be reasonably certain that it was not slanted or spun to benefit Martha; and it does not support an insider trading prosecution - criminally or civilly. Plus, It makes sense, it what has been leaked to the press, and is a perfectly reasonable story. People usually act reasonably in my experience, and when the broker learned that Waksal was selling, he thought that was important enough for Martha to know (and presumably the broker’s other clients as well).

Martha’s reaction is also perfectly reasonable. Heck, if the President of the Company is selling, then I am going to sell. Wouldn’t you? Again, no inside information, no non-public information, and no wrongful conduct. People sell on the basis of the sells of insiders all the time, heck, entire companies have been formed simply to track the buying and selling of insiders. There is the small matter of the fact that Sam’s sells are not public knowledge, but the law does not require them to be, and certainly does not require Martha to know whether the information is public or not. In fact, I can make a terrific argument that Martha thought the information WAS public, but I will leave that for another column.

So far, so good, and Martha has not done anything wrong.

Then comes the investigation.

Quite honestly, I firmly believe that faced with these facts, and the questioning by the government, most of us would tell the government exactly what happened. If Martha had come to me, I would have told her to tell the investigators exactly what happened. I bought the stock, I got a call that Sam, my good friend who I know very well, and whose opinion I trust, was selling his stock. Because of that, I sold mine, and then called Sam to find out what was going on. End of story.

The reality is, there is no wrongful conduct there. But there is certainly a risk that the SEC would believe there was, and that by giving that answer, the SEC would believe that insider trading occurred. That is certainly a possibility.

Given that view, there are two choices – tell the truth or shut up. The insider trading violation is far from clear, and the worst that happens is that the SEC threatens a proceeding, and then settles for disgorgement of the profits and a one time penalty – a total repayment of $91,346, putting her out of pocket $45,673. The SEC settles most of their cases in that manner.

Sure, there is some adverse publicity, but her public relations people could handle that – “Martha did not know that she was doing anything wrong in selling the stock, and she has voluntarily returned all of the profits that the SEC alleges she earned, as well as a small fine. She is happy to put this behind her...blah, blah, blah.” Get a couple of securities attorneys on CNBC to discuss the law, and it is clear that Martha did not do anything seriously wrong. In fact, you could even spin that so that it was the SEC who was conducting an unfair and in appropriate witch hunt.

Once again, end of story. But Martha did not choose that course of action. According to the Indictment, she chose to conspire with the broker, and his assistant, and to fabricate a story about an unwritten stop loss order at $60 and created the New Story. And that fabrication apparently led to another, and another and another, and before long, there was obstruction of justice, and a conspiracy to do so, between Martha and her broker.

Martha told the New Story to the SEC. Martha had her attorneys tell the New Story. Martha repeated the New Story to the press, and to anyone who would listen, and continued telling the story until the broker’s assistant began cooperating with the government, and then she finally did what she should have done in the first place. She shut up.

Only by then it was too late. The deed was done, she didn’t bear her troubles bravely, and her remedy was worse than her disease.

If she had been truthful about what happened, she would have been a lot better off. Broker told her to sell some stock but not why. She sold and made money. If there was insider trading it was by her broker.

[phill4paul]

Phil, take your money and get the hell out. Give Amerika the finger and just get the hell out. Yesterday.

[Zippyjuan]

Have you left already? Where did you go to?

[phill4paul]

Have you left already? Where did you go to?

If I had Phil's resources I could easily disappear. And would. I would quit AmeriKa in a heartbeat. I don't have his resources. Do you?

[Occam's Banana]

Rothbard wrote about [insider trading].

A brief clip from a larger speech:

Rothbard on Insider Trading
https://www.youtube.com/watch?v=m0wvlVvZDtk

https://www.youtube.com/watch?v=m0wvlVvZDtk

[Zippyjuan]

If I had Phil's resources I could easily disappear. And would. I would quit AmeriKa in a heartbeat. I don't have his resources. Do you?
If you have the will, leaving is easy. Millions leave their own country with little if anything every year. All it takes is a plane or bus ticket. Sounds like you don't want to make any sort of sacrifice to do so. You are comfortable enough here. Not having resources now should actually make it easier- you lose less by leaving. I moved to London with $5000 in my pocket and lived there for six months until my visa ran out. I spent another five months travelling around Europe after that.

[devil21]

Bit more detail on the Martha Stewart case:

http://www.seclaw.com/docs/marthastewartindictmentseccivil0603


If she had been truthful about what happened, she would have been a lot better off. Broker told her to sell some stock but not why. She sold and made money. If there was insider trading it was by her broker.

That's an idiotic statement. If she had remained silent she would have gotten off scot free! Even your own link states the feds had no evidence to support an indictment. Any one who thinks they can talk themselves out of being arrested should watch that Don't Talk To Police video to understand why that's terrible advice.

[dillo]

He should just run for congress, auto immunity

[devil21]

He should just run for congress, auto immunity

Or join a police department.

[phill4paul]

If you have the will, leaving is easy. Millions leave their own country with little if anything every year. All it takes is a plane or bus ticket. Sounds like you don't want to make any sort of sacrifice to do so. You are comfortable enough here. Not having resources now should actually make it easier- you lose less by leaving. I moved to London with $5000 in my pocket and lived there for six months until my visa ran out. I spent another five months travelling around Europe after that.

What the hell are you on about? I'm talking about disappearing. With the funds and resources to do so indefinitely. Not taking a little summer tour.

[Zippyjuan]

OK- wait until you make your first billion. Of course if you have a billion you can afford to do pretty much what you want anyways so probably would care less about going someplace else. Disappearing with nothing is far easier than disappearing with a billion. Just an excuse.
I worked legally but could have easily gone underground. I knew several who were doing that and living comfortably.

[phill4paul]

OK- wait until you make your first billion. Of course if you have a billion you can afford to do pretty much what you want anyways so probably would care less about going someplace else. Disappearing with nothing is far easier than disappearing with a billion. Just an excuse.

:rolleyes: You betcha. Poverty in a country with no social connections is a way to get ahead in this world. How is the good life out of country? Care to share your current status?

[oyarde]

If you have the will, leaving is easy. Millions leave their own country with little if anything every year. All it takes is a plane or bus ticket. Sounds like you don't want to make any sort of sacrifice to do so. You are comfortable enough here. Not having resources now should actually make it easier- you lose less by leaving. I moved to London with $5000 in my pocket and lived there for six months until my visa ran out. I spent another five months travelling around Europe after that.
5K ? you were flush .

[Zippyjuan]

:rolleyes: You betcha. Poverty in a country with no social connections is a way to get ahead in this world. How is the good life out of country? Care to share your current status?

I enjoyed my time in Europe but I also think things are pretty good for me right where I am. Simple life. Home paid for. Job in easy walkiing distance. No car to worry about. Not really into material things. Lots of money doesn't always buy you more happiness or freedom. The more you have the more you are afraid of losing it. If your desire is

talking about disappearing. With the funds and resources to do so indefinitely

you won't have any social connections there either. True freedom and happiness is a state of mind. It is free and you can find it anywhere.

http://health.howstuffworks.com/mental-health/human-nature/new-study-says-the-excessively-rich-arent-any-happier-so-who-is.htm


When Princeton University released a study showing that people needed an annual income of $75,000 per year per household and no more to be happy, I wasn't that surprised. Above that amount, more cash has no effect on "emotional well-being," or how elated, sad or stressed you feel on a day-to-day basis, according to the research.

According to the Washington Post, people have a threshold of financial security and material well-being and once they've reached it, there are diminishing returns on salaries exceeding that amount. Financial security is certainly an aspect of happiness. That is-- paying mortgage or rent, utilities, food, and then whatever is left over for savings--but beyond that, money has little bearing on our outlook and overall happiness.

[devil21]

Whoever is in control of Zippy's account now is weak sauce. I liked old Zippy better.

[Madison320]

It's very subjective and kind of bullshit.. But basically because the company is "publicly traded" and the government regulates the trading they want to make it fair and balanced between the investors and stockholders within the company. You aren't supposed to trade your own company's publicly traded stock based on knowledge that you only know because you work there (or know someone who does) and is otherwise not public information..

But what if I worked for a company and was planning on selling some of my stock to buy a house, and right before I sold the stock I found out that my company was going to be selling off some of their holdings in a couple of months and the stock value was expected to drop then? I could be arrested for selling stock I was planning on selling anyway, but because this insider knowledge information just came up, suddenly I can't do what I was planning on doing to begin with.

It is not libertarian, imo.

I agree. My question is "Who's the victim in this case?" Did Mickelson steal money from anyone?

[Lucille]

What a dick move to confront him at the golf course.

http://armstrongeconomics.com/2014/05/17/more-insider-trading-nonsense-wheres-the-beef/


Insider Trading emerged from the Great Depression. Directors withheld news that the company was broke to sell their stock first and then made the announcement. It was Rudy Giuliani who flipped the definition in order to prosecute Michael Milken. He claimed that merely having inside info allowed you to make a profit and the FRAUD was that others were denied the same opportunity to make money. This is a classic communist theory and it is inconsistent with a free market for to apply this theory EXCLUSIVELY to equities is a denial of EQUAL PROTECTION of the law and a denial of one’s civil rights. This is tantamount to saying it is a crime to jaywalk only if you wear a suit.

Insider Trading, as Giuliani redefined it to further his career, is fundamentally flawed. NO serious trader relies upon a single fact or piece of information. Prosecutors, who never understand trading, presume if someone called you and said GM was going to introduce a car that flew and you bought stock after looking at the charts, etc, they isolate only that piece of information. In a bear market, even good news is ignored. Professionals know that reality. I have NEVER seen any professional fund manager EVER rely upon a single piece of info. The only such thing is a guaranteed takeover bid. Other than that, this theory is bogus. It should be relegated to what it originally meant when it was FRAUD only because the directors withheld that news until they sold their shares first. That can never happen these days.

http://armstrongeconomics.com/2013/11/05/sac-hedge-fund-being-shut-down-truth-about-insider-trading/


Real insider trading was a director of a company withheld bad info so he could sell his own shares and then announce the company was bankrupt. That was what the law was intended to prevent but Rudy Giuliani turned it upside down in 1987 to make a name for himself prosecuting Michael Milken so insider trading is now so vague it can be used to destroy all of Wall Street. That is the whole truth behind this type of prosecution.