CNBC reports this morning that former Dean Foods(DF) chair Thomas Davis will be charged with insider trading, along with well-known Las Vegas gambler William “Billy” Walters. Davis had resigned last year as rumors swirled of the investigation into insider trading based on nonpublic information regarding Dean’s Whitewave(WWAV) spinoff. Walters is believed to have passed the tip along to professional golfer Phil Mickelson. Mickelson, to our knowledge, is not being charged at this time.
Stocks often surge upon the announcement of a spinoff transaction, as Dean Foods did on announcing the spinoff of Whitewave. Even so, this is the first case we can remember of an indictment for insider trading related to a spinoff announcement. It is unusual as well in that the company’s chair is being charged.
Disclosure: The author holds no position in any stock mentioned
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