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 Federal investigators are looking into whether Mickelson and Walters
may have traded illegally on private information provided by Icahn
about his investments in public corporations, the source told
Reuters, confirming reports on Friday.
Icahn, a legendary activist investor, told Reuters that he was
unaware of any investigation and said that his firm always followed
the law. He acknowledged a business relationship with Walters but
said that he did not know Mickelson personally.
"I am very proud of my 50-year unblemished record and have never
given out insider information," he said.
Walters and Mickelson play golf together, the source familiar with
the investigation told Reuters.
Mickelson said in a statement, "I have done absolutely nothing
wrong. I have cooperated with the government in this investigation
and will continue to do so."
"I wish I could fully discuss this matter, but under the current
circumstances it's just not possible," said the statement, issued
through his manager.
The Wall Street Journal cited Glenn Cohen, Mickelson's lawyer, as
saying the golfing legend was not a target of the federal probe.
Walters did not respond to requests for comment. Spokespeople for
the FBI and the SEC declined to comment.
None of the three men have been accused of any wrongdoing, the
source told Reuters.
YEARS OF INVESTIGATING
The investigation began three years ago according to the source. It
is the latest to emerge from a multi-year crackdown on insider
trading by U.S. authorities.
The investigation centers on suspicious trades in Clorox Co CLX.N by
Walters and Mickelson as Icahn was trying for access to the board of
the consumer products company in 2011, the New York Times reported,
citing people briefed on the probe.
Icahn had accumulated a 9.1 percent stake in Clorox in February
2011. In July, he made an offer for the company that valued it at
above $10 billion and sent its stock soaring.
Investigators were also looking into trades that Mickelson and
Walters made related to Dean Foods Co DF.N, the Journal cited the
people as saying. The New York Times cited people briefed on the
investigation as saying that in that particular case, investigators
are looking into trades placed around 2012 just before the company
announced quarterly results.
Those trades appeared to have no connection to Icahn, the newspaper
added. Icahn told Reuters he had never purchased shares nor been
involved with Dean.
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MAKING HEADWAY
Federal prosecutors in Manhattan are handling the inquiry in
conjunction with the FBI and the SEC, the New York Times reported.
Since August 2009, Manhattan U.S. Attorney Preet Bharara's office
has convicted 81 people of insider trading, either at trial or via
guilty pleas, with no acquittals.
The current investigation made little headway initially, the Times
reported. Investigators are searching phone records, seeking to
determine whether Icahn had spoken to Walters before the trades, the
Times cited anonymous people briefed on the probe as saying.
And about a year ago, FBI officials approached Mickelson at
Teterboro Airport in New Jersey, asking the celebrity golfer to
discuss his trading, the Times cited its sources as saying.
Icahn, a prolific tweeter and vocal critic of some of America's
largest corporations, habitually broadcasts his thoughts on
corporations and, occasionally, stock positions he has taken. The
billionaire took to Twitter earlier this year when he pushed Apple
Inc's board to expand the iPhone maker's buyback program, and
several times tweeted when he had increased his position in the tech
company.
During a campaign to get eBay Inc to hive off its fast-growing
PayPal division, he openly criticized the Internet retail giant's
board. But the activist investor has tweeted just once in the past
three weeks.
Even if Icahn did leak information about his plans regarding Clorox,
it may not necessarily have violated the law. Insider trading
regulations prohibit trading based on material, nonpublic
information obtained from someone who breached a fiduciary or
confidentiality duty by disclosing it.
As a non-board member, Icahn owed no duty to Clorox shareholders. It
is possible, though by no means definite, that Icahn owed a
confidentiality duty to his own shareholders.
Mickelson, 43, is currently playing at the Memorial Tournament in
Dublin, Ohio ahead of the June 12-15 U.S. Open.
The American player clinched his fifth major title at last year's
British Open. He would complete a career grand slam of the four
majors by winning the U.S. Open, where he has been runner-up a
record six times.
(Additional reporting by Mark Lamport-Stokes; Writing by Edwin Chan
and Frances Kerry; Editing by Peter Henderson and Louise Heavens)
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