Here's Why Phil Mickelson Isn't Being Charged With Insider Trading

PGA all-star Phil Mickelson received a tip to buy shares of Dean Foods Co DF from a friend of his. Friends passing along stock advice is common and a daily occurrence but when a tip originates from a Board member of said company, the Securities and Exchange Commission is likely to take notice.

Mickelson received the tip to buy Dean Foods from his friend William Walters who is a professional gambler. Walters himself received first hand information from a board member of Dean Foods who revealed the company is set to announce a spinoff of its organic foods unit which is likely to cause the stock to pop higher.

Mickelson allegedly bought $2.4 million worth of Dean Foods' stock, according to Bloomberg. The golf pro pocketed a cool $931,000 a week after the purchase after the company announced a spinoff - as expected.

The case appears to be clear enough - Mickelson acted on insider information. Or did he?

Bloomberg stated it has become difficult to make the case for insider trading activities. In fact, an appeals court ruling in December 2014 legalized a "don't ask, don't tell information-gathering model."

"The government can go after the original tippee, which is what they have done here," John Coffee, a Columbia law professor, told Bloomberg.

In other words, it's legal to act on a trade that one receives secondhand, as long as the trade is made without the knowledge of how it was obtained in the first place.