Carl Icahn may have illegally revealed his plans to take over Clorox a few years ago.
The FBI and Securities and Exchange Commission are currently conducting an investigation into Carl Icahn, golfer Phil Mickelson and reputed Las Vegas gambler William Walters. The three are suspected of engaging in an illegal insider trading scheme.
The investigation revolves around the suspicion that Ichan provided the other two men with non-public information about his investments in public companies. Information about Ichan’s attempted takeover of Clorox is at the center of the investigation, which has been going on for two years.
Apparently, federal investigators became concerned about illegal trades when Car Ichan made a $10 billion offer to buy Clorox in 2011. This led to a sharp increase in the value of the company’s stock, during which time there was a great deal of suspicious trading in it. If people had inside information as to Ichan’s plans then they could have bought stock in Clorox before it was announced and then sold them for a profit after the proposed purchase was revealed.
Phil Mickelson released a statement yesterday in which he said, “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.”
His lawyer told the Wall Street Journal that the FBI confirmed that Mickelson is not a target of their investigation. “Phil is not the target of any investigation. Period, ” he said.
Both Mickelson’s and Walters’ trades of Clorox stock are being reviewed by US investigators to see whether or not the two men profited from the rise in Clorox Stock. The SEC believes that Walters was tipped off by Ichan, who is a known Las Vegas gambler. Walters and Mickelson made similar trades in Clorox stock at the same time.
In a statement Carl Icahn said, “We don’t know of any investigation. Further, we are always very careful to observe all legal requirements in all of our actions. I’m very proud of my record and I’ve never given out insider information. I’m very careful. That’s why I have an unblemished record. While I’ve obviously heard of Phil Mickelson, I’ve never spoken to him or met him.”
But Mr. Ichan is known for engaging in Shareholder activism. Such activism is when investors, such as Ichan, try to push companies to make major changes. The investors’ public arguments alone are enough to affect the value of a company’s stock.
The FBI and the SEC may only be concerned with the negatives of shareholder activism. This investigation, it has been speculated, is only driven by a desire to curtail such activism and to see if activists, such as Ichan, leak information about their plans before going public.
But lawyers have argued that when shareholder activists leak information they are not violating securities laws because they are not guilty of revealing any information that they have an obligation to keep secret. If that is what happened here then the government may not have a case against the tree men.
Mickelson and Walters are also under investigation for possible insider trading of Dean Foods stock. They traded in the company’s stock just before it announced an IPO for a subsidiary in 2012.
Carl Icahn, 78, is an investor and the proprietor of Ichan Enterprises. With an estimated worth of $23 billion, shares of his publicly-trade Icahn Enterprises have soared by more than 50% in the last year.