The Don’t Ask, Don’t Tell Guide to Trading on Inside Information

On Friday, July 27, 2012, Phil Mickelson received a phone call. It wasn’t just any call; it was, according to the U.S. Securities and Exchange Commission, a transmission of business intelligence potentially worth millions of dollars. Mickelson’s friend, a gambler named William Walters, was calling to urge him to buy shares of Dean Foods. The Dallas-based dairy conglomerate was going to announce a spinoff of its organic foods unit the following week, and the company’s board thought it would cause Dean stock to pop. Walters had gotten the tip from the best possible source, a board member who’d participated in the conference call where the board encouraged the Dean chief executive officer to move ahead. It was about as close to a sure thing as you could get, and Walters, who understood odds better than most people, had already accumulated almost 4 million shares, an aggressive bet worth about $50 million.

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