Why the Hell Did the SEC Sue Phil Mickelson?

Today the U.S. Securities and Exchange Commission filed an insider trading complaint against three-time Masters winner Phil Mickelson. The story involves: golf! Money! Federal crimes! Vegas! A giant dairy company! What in the world is going on? We have some answers.

Wait, is Mickelson going to jail?

No. He has agreed to settle his part of an SEC civil complaint in which he appears as a “relief defendant.” Two others named in that suit are also facing criminal charges, but Mickelson is not.

So what’s this whole thing about, then?

William “Billy” Walters, a prominent Las Vegas sports gambler, and Thomas Davis, the former chairman of Dean Foods, were charged with criminal and civil offenses, largely resulting from the trading of Dean Foods stock between 2008 and 2014. Prosecutors allege that Davis repeatedly fed Walters information about Dean Foods’ earnings, forecasts, and mergers and acquisitions, allowing Walters to profit by more than $43 million during this period.

What the heck is Dean Foods?

It is, in its own words, “the nation’s largest processor and direct-to-store distributor of fluid milk,” which is the most vile possible way to describe normal milk.

If Davis and Walters were successfully executing insider trading for so many years, they must have been pretty sneaky, right?

They called Dallas-based Dean Foods “the Dallas Cowboys” in all their conversations.

So how did Mickelson get involved?

Mickelson comes in not for committing insider trading, but for profiting from it. He’s a golf buddy of Walters’s, and has allegedly received stock recommendations from him in the past. Prosecutors say that in 2012, Walters instructed Mickelson — who owed Walters money for previous bets — to purchase and later sell $2.4 million of Dean Foods stock, resulting in a profit of $931,000, some of which he used to repay Walters.

Over the course of the investigation, Mickelson became a useful prospective witness for the federal government. The New York Times reports that the FBI went so far as to approach Mickelson on a golf course in its attempts to gain his cooperation.

But Mickelson had never previously been involved in any unsavory financial business, right?

Wrong. This is not the first of Mickelson’s Vegas connections to get busted. Between 2010 and 2013, he transferred nearly $3 million to gambling handicapper Gregory Silveira, according to ESPN’s Outside the Lines. In 2015, Silveira pleaded guilty to three counts of money laundering related to the transactions. (In March he petitioned to have his guilty plea withdrawn.) Then, as now, Mickelson was not accused of wrongdoing nor charged with any crimes.

In 2014, Mickelson was investigated in a separate insider trading case involving Walters, this time with Clorox stock. Investigators alleged that Walters and Mickelson may have benefited from confidential information from investor Carl Icahn. As with the Dean Foods case, FBI and SEC investigators suspected Mickelson of receiving information from Walters. The investigation did not result in charges against either of them.

What does he have to do now?

“The remedy he has agreed to, subject to court approval, is to pay back money he made as a result of these trades,” prosecutors said during a Thursday press conference.

So: Mickelson owes the government roughly $1 million. He has indicated that his sponsors are sticking with him, and given that his career earnings come to more than $79 million — second only to Tiger Woods — it’s reasonable to expect that Mickelson will live to gamble (and, hey, golf) another day.

So if he’s not being charged, why is Mickelson such a big part of this?

Under U.S. Attorney Preet Bharara, the U.S. Attorney’s Office for the Southern District of New York has been a strident opponent of financial crime. But after a U.S. appellate court overturned two prominent insider trading convictions in 2014, it seemed as though fewer such investigations would proceed.

In essence, Mickelson is being used by Bharara’s office to send a message: Not only will the U.S. Attorney’s Office continue to go after insider trading, it will pursue those who profit from it, too. That Mickelson is famous and sure to generate massive coverage of the case — well, that doesn’t hurt.

This piece originally appeared on the Ringer Facebook page on May 19, 2016.