On Friday, April 7 of this year, the famed Las Vegas sports gambler William T. “Billy” Walters was found guilty in the U.S.  District Court for the Southern District of New York in Manhattan of 10 charges of securities fraud, wire fraud and conspiracy, the most serious of which carry a potential sentence of up to 20 years in prison. This was one of the biggest insider trading trials in recent years.

At issue in the trial was whether the relationship between Mr. Walters and his source, Thomas C. Davis, a former chairman of the board of Dean Foods of Dallas was sufficiently close to find that tips about Dean Foods were a gift in violation of the insider trading laws.1

Mr. Walters was accused of using non-public information from Mr. Davis to make more than $40 million from 2008 to 2014 by realizing profits and avoiding losses.

Mr. Davis, who had pleaded guilty to security fraud, wire fraud and obstruction of justice, was making his first appearance as a key prosecution witness in the fraud and conspiracy trial of Mr. Walters.2

As previously reported, at issue in insider trading cases is how to interpret the United States Supreme Court’s December 6, 2016 decision in Salman v. United States which found that the government did not always have to show that something valuable changed hands to prove a crime was committed.3

The investigation into Mr. Walters’ activities and subsequent trial drew prominent figures like Carl C. Icahn, the billionaire investor and unpaid advisor to President Trump, and Phil Mickelson, the champion professional golfer.

A broker for Mr. Walters testified on cross examination that some of Mr. Walters stock trading ideas had come from Mr. Icahn, who was not charged with wrongdoing.

During a hearing outside the presence of the jury, one of Mr. Walters’ lawyers told the judge that Mr. Walters and Mr. Icahn were friends. “Mr. Walters has a long history of investing in stocks that Mr. Icahn has publicly announced he’s interested in.”

Mr. Mickelson was also mentioned during the trial as someone who had traded in Dean Foods shares and once owed nearly $2 million in gambling debts to Mr. Walters. Mr. Mickelson made roughly $1 million trading Dean Foods shares. He agreed to forfeit those profits in a related civil case brought by the Securities and Exchange Commission. Mr. Mickelson was not criminally charged, and he was never called to testify.

Prosecutors said that Mr. Davis provided Mr. Walters with secret Dean Foods information about future earnings statements, the planned purchase of another company, and a pending initial public offering. At the same time, Mr. Walters arranged loans of nearly $1 million to Mr. Davis, who had financial problems and repaid only a small portion of what he borrowed.

During the trial, prosecutors displayed phone logs and trading records, and an agent with the Federal Bureau of Investigation testified that Mr. Walters sometimes made major trades within moments of speaking with Mr. Davis on the phone.4

The Acting U.S. Attorney said: “Today, Billy Walters lost his bet that he could cheat the securities markets on a massive scale and get away with it scot-free. As a unanimous jury swiftly found, Walters received inside information about Dean Foods for years – directly from one its board members – and illegally traded on it, netting over $43 million. Armed with his illegal edge, Walters made huge, perfectly-timed trades, at times accounting for over a third of the trading volume in Dean Foods stock.”5

Mr. Walters’ attorney said he would appeal the verdict.

As new insider trading trials are held and verdicts are rendered, the courts will define the boundaries of the Supreme Court’s decision in Salman v. United States.


  1. Henning, Peter J., “Courts Will Define Boundaries of Friendship in Insider Trading,” The New York Times, March 6, 2017.
  2. Moynihan, Colin, “In Stark Terms, Ex-Chairman of Dean Foods Describes Passing Along Tips,” The New York Times, March 21, 2017.
  3. Peluso, Romano I., “Continuing To Define Insider Trading,” Perkins Coie LLP, corporatetrustinsider,com , March 13, 2017.
  4. Moynihan, Colin and Liz Moyer, “Sports Bettor Is Convicted of Profiting From Inside,” The New York Times, April 8, 2017.
  5. justice.gov/usao-sdny, “William T. “Billy” Walters Convicted in Manhattan Federal Court of Insider Trading,” April 7, 2017.