A new report from the financial publication Hunterbrook alleges that Phil Mickelson received inside information about an offshore oil company and distributed that information to a private group of company shareholders. Mickelson then passed over X Friday afternoon to defend themselves.
On Friday, Hunterbrook a story released including a series of private messages Mickelson shared with a group of investors for Houston-based oil startup Sable Offshore. In the messages, Mickelson appears to share material, non-public information gleaned from interactions with Sable Offshore CEO Jim Flores – a decision that could have legal ramifications for Mickelson, the company’s CEO, or both.
The three-line story chronicles the latest actions of embattled oil company Sable Offshore, which paid $988 million to take control of a troubled Exxon oil field off the coast of Santa Barbara, California, and quickly attracted investors looking for a potential moonshot.
From the start, the Sable business was based on a calculated gamble: If Flores could resume production from Santa Ynez’s offshore oil infrastructure — a collection of three offshore platforms, a processing facility and a pipeline system that were closed after an environmental disaster in 2015 — the nearly $1 billion investment would look like a bargain.
But the 20 months since the company’s founding have been much tougher than investors had hoped. Sable Offshore’s efforts to protect against future environmental disasters have faced a series of regulatory challenges over the past year and a half. To date, the company has failed to restart production on its oil infrastructure, causing Sable Offshore’s share price to fall more than 53 percent in the past twelve months.
Mickelson’s involvement with the company has been widely publicized. The LIV Golf star has tweeted about Sable Offshore more than 100 times in the past 20 months, many of which were aimed at California lawmakers and regulators involved in shutting down oil production.
Mickelson’s own history with insider trading is well documented. In 2016 he has paid more than $1 million to the Securities and Exchange Commission to settle allegations that he traded on inside information obtained from legendary gambler Billy Walters.
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Dylan Dethier
The Hunterbrook The story claims that Mickelson was more than just a disgruntled investor, revealing the contents of an X-group (formerly Twitter) that appears to show the six-time major champion sharing information taken from Flores before it was made public.
“I spoke to Jim this morning. There will be an announcement today after the market closes. It could be an 8K or a press release,” Mickelson reportedly wrote on X to a group of Sable investors on September 29, hours before an announcement from the company indicating that it had filed paperwork with the state of California seeking permission to restart oil production. This was one of the few examples of non-public material information discovered in Hunterbrook‘s reporting.
The Hunter book The story also appeared to show that Mickelson was involved in a coordinated effort to secure federal support for the Sable Offshore project, a “prayer” that could reverse stalled oil production and restore some of Sable’s sunken stock price. A leaked phone conversation quoted in the Hunterbrook The story appears to show Sable Offshore CEO Jim Flores discussing a “West Coast game” between “a certain left-handed golfer” and current U.S. Secretary of Commerce Howard Lutnick. (Lutnick countered that he had plans to play with Mickelson, saying he had never heard of Sable Offshore.)
The legal implications of Mickelson’s involvement in the story remain uncertain. The US Insider Trading Act states that the transfer of material, non-public information is not itself illegal as long as the information is not traded. On Friday afternoon, Mickelson responded to several tweets about the story with a similar defense, arguing that he did not act on the information he received, and that his actions in the story did not “insinuate that there was any wrongdoing.”
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“So a company says I can’t tell you anything, but we’ll announce something at the end,” Mickelson said in one X response. “I don’t know if it’s a dilution and the shares go down, or a deal to make the shares go up. I have to wait to see what the information is, I don’t make any trades and am extremely cautious given the past. I’m not even sharing that the information will come until after the close.”
Mickelson also included an accusation of his own Hunterbrooka financial journalism group of which unusual business orientation allows it to act on information collected by its reporters, as long as it is not material, non-public information. Hunterbrook announced on social media that it had not made any transactions based on the findings of the Sable Offshore story.
“This appears to be stock manipulation on your part and is defamatory,” Mickelson wrote. “Did you trade anything today?”
The story, which also suggested Sable Offshore would soon need to raise $200 million in dilutive equity, sent share prices plummeting on Friday afternoon. At closing time, Sable Offshore sold for $10.46 per share, down 18.47 percent from the start of the day.
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