I have no idea whether Phil Mickelson, one of the world's premier golfers and three-time winner of the Masters golf tournament, is guilty of insider trading. But the mere fact that we are talking about it tarnishes his reputation. And why are we talking about it? The FBI has made public sport of stalking him.
It all has to do with the price of Clorox stock. In 2011, Mickelson and several others, including a big-time sports bettor from Las Vegas named William Walters, made millions virtually overnight on well-timed stock trades, according to reports published in The New York Times and elsewhere.
How'd they do that? They bought and sold shares just before billionaire Carl C. Icahn announced a takeover bid for Clorox, driving up the price of the shares.
The Securities and Exchange Commission spotted the transactions, and, apparently, federal investigators decided to look more closely at Mickelson, Walters and Icahn, suspecting more than mere serendipity accounted for the windfall.
Insider trading is what criminal defense lawyers call "white-collar crime." In terms of a bygone era, these offenses are the sort committed by folks who don't get their hands dirty while working for a living.
Insider trading is basically a form of rigging a market. Information is shared among favored parties before some event affecting a stock's value is announced on the open market. Those privy to the secrets get a jump on the market.
In the Clorox case, the feds suspect that some folks were tipped off that Icahn was about to try to take over Clorox, signaling that investing in it was a safe bet. If someone with a legal duty to keep such things secret leaked the information so that he and his friends can benefit, the law is broken.
Did Mickelson benefit in such a way?
There are no press reports that he did. But the FBI keeps turning up at awkward places, raising questions about Mickelson. Last year, agents escorted him off an airplane at Teterboro Airport in New Jersey to question him. Last week, federal gumshoes confronted him at a golf tournament in Ohio.
This public badge-flashing is repulsive: having the feds turn up at your place of employment is, to most people, about as welcome as having a hooker dressed for a night's work turn up at a wedding. Of course, people talk: We are a gossiping species.
The agents' goal is simple and transparent: intimidation. They want to send a message to the golfer that all of us can read in unison and recite: "Bad, bad boy, Phil. You better talk now or things will get worse, much worse for you."
In the normal course, the FBI is a little more discreet, especially in a case in which they are hoping to turn one witness against another. Agents typically appear unannounced at your door, flash a badge or two, and suggest that it might be in your interest to talk to them.
Sometimes, things progress a little more formally. An agent might turn up at your door with what's known as a "target" letter. Such letters notify you that the federal government is contemplating criminal charges against you, and you are advised to consult a lawyer, and then to have the lawyer reach out to Uncle Sam.
I have no idea whether the feds engaged in quieter efforts to shake down Mickelson. I suspect they did, and that he rebuffed quieter efforts to talk, so the feds upped the ante, publicly embarrassing the golfer by tracking him down in public, as though one of the highest-paid athletes in the world were some sort of deadbeat.
According to sources The New York Times will not name, Mickelson is reported to have spent an hour talking to federal agents last year. He pledged his cooperation, but told them he didn't know Icahn and had no idea about the propriety of the Clorox stock tips, unnamed sources say.
It is troubling that the Times resorts to unnamed sources in reporting on this investigation. Someone is using the Times -- someone who wants to tell a story but lacks the integrity to own what he says. Some part of me wonders whether the source of this background information is none other than an FBI agent.
Here's how unnamed sources manipulate the media.
A "source," that is, a person known to a reporter and/or an editor, is contacted, or, as is often the case, makes contact, with a newspaper. He or she agrees to tell the newspaper information, but only on the condition that the source's name is not used. If the newspaper trusts the source, the material might by published, with facts attributed to, as the Times put it in a recent Mickelson story -- "people who spoke anonymously because they were not authorized to discuss the investigation."
Journalists take pains to protect their sources. This week, the U.S. Supreme Court declined to hear a case involving a Times reporter named James Risen, who has refused to turn over the name of a source or two that he relied upon in writing "State of War," a 2006 book about the so-called war on terror. Risen is promising to go to jail rather than name sources.
We sometimes mix metaphors when it comes to the press and the Constitution. The Constitution establishes three coordinate branches of government; popular lore refers to the press as the Fourth Estate. The conflation of these metaphors tempts some to read into the Constitution a requirement that the press be treated as a fourth branch of government.
The press, vital as it is, is simply not that. Giving it the power to hide the identity of sources is potentially dangerous. The damage done by a character assassin is just as deadly coming from an "unnamed source" as it is from a named source.
In the Mickelson case, my hunch is that the FBI is leaking information to put pressure on the golfer. No one else has an interest in putting pressure on the golfer. Shame on the FBI.