Federal investigators are examining some well-timed trades made by golf champ Phil Mickelson and golf course owner and Las Vegas gambler William T. Walters. Authorities say the two men made big, around the time activist investor Carl Icahn launched hostile takeover bids for the company. No charges have been filed, and Icahn asserts that his record is "unblemished."
As Wall Street keeps its eyes on this investigation, here are some other insider trading cases that made headlines.
The Wall Street Journal columnist R. Foster Winans was convicted in 1985 of giving information to two stockbrokers about stocks he was planning to write about in the Heard on the Street column. They used the information to make about $690,000. Winans’ cut was $31,000. Winans was sentenced to 18 months in prison. Other players, including stockbroker Kenneth Felis and Winans’ roommate, David Carpenter, were also convicted. A second stockbroker, Peter Brant, pleaded guilty.
The arbitrageur paid $100 million to the Securities and Exchange Commission to settle insider-trading charges that he netted $50 million in illegal profits. Boesky pleaded guilty to a related charge and was sentenced to 3½ years in prison in 1987.
Printing company worker William Jackson and stockbroker Brian Callahan were convicted of insider trading in 1990 for using stock information in Business Week magazine before it was distributed to the public. The magazine was printed by Jackson's employer, R.R. Donnelley. The government said Jackson and Callahan made over $19,000 each in profits each. They were ordered to repay personal profits and were fined $37,445.
In a separate case, former Business Week broadcast editor Rudy Ruderman pleaded guilty to two counts of mail fraud in 1988 related to a scheme to by stocks based on confidential information in the magazine before it was published. Ruderman was sentenced to six months in prison.
Once the CEO of investment bank Keefe, Bruyette & Woods, James McDermott Jr. was convicted of insider trading in 2000 for giving information about pending bank industry mergers to his mistress Kathryn Gannon, an adult-movie star, who went by the name Marilyn Star. McDermott was sentenced to eight months in prison, while Gannon received a three-month term. McDermott was fined $25,000.
Former ImClone CEO Samuel Waksal was sentenced to 87 months in prison and fined $3 million after pleading guilty to six counts, including insider trading and fraud. Waksal sold ImClone stock after finding out regulators had rejected an application for the company's new cancer drug, Erbitux. (The drug was later approved.)
In 2004, style guru and media magnate Martha Stewart was convicted of obstruction of justice charges relating to her sale of ImClone stock. She was sentenced to 10 months, split between prison and home confinement, and fined $30,000. Her stock broker, Peter Bacanovic, was also convicted.
Jeffrey Skilling, the former Enron president, was convicted in 2006 on 19 counts, including insider trading. He was sentenced to 24 years and fined $45 million. Last year, a judge cut 10 years off Skilling's sentence in a deal in which more than $40 million of Skilling's fortune will be given to victims of Enron's collapse. Skilling could be released as soon as 2017.
Raj Rajaratnam was the founder of the once-mighty hedge fund firm Galleon Group. The firm fell apart after Rajaratnam was arrested in 2009 on charges of conspiring to trade using insider information. The scheme could have brought in profits of some $20 million, according to the government.
Rajaratnam was found guilty on 14 counts of conspiracy and securities fraud charges on May 11, 2011. The jury convicted him of nine counts of securities fraud and five counts of conspiracy for what prosecutors describe as the money manager's central role in the most sweeping probe of insider trading at hedge funds on record.
Former Goldman Sachs executive was also convicted for supplying Rajaratnam with many of the tips that eventually took the Galleon manager down.
Steven A. Cohen ran one of the most admired hedge funds in the world, garnering some of the highest returns (and highest fees) in the industry until its spectacular fall from grace.
In 2010, federal agents raided the offices of two hedge funds founded by SAC Capital Advisors alumni, and later arrested several top traders at SAC, including Michael Steinberg and Matthew Martoma. Cohen was not charged, but SAC Capital itself pleaded guilty in November to fraud charges and agreed to pay $1.8 billion to settle charges that it allowed insider trading for more than a decade. Steinberg and Martoma are among those convicted.
Scott London (pictured at left), a senior partner at KPMG, had a habit of talking about work over dinner and golf with an old buddy. He later discovered his friend was making trades based on their banter, and began accepting cash gifts and Rolex watches in exchange for further tips. In total, London received about $70,000 in gifts before the SEC found them out. His friend Bryan Shaw pulled in roughly $1.3 million.
"I nearly threw up," London said of hearing just how much Shaw had profited from the scam. "I was led to believe the number was far less, closer to $200,000."
London in April to 14 months in prison and a $100,000 fine. Shaw pleaded guilty to insider trading charges as well.