Food for thought

Insider trading rap offers tip for US boardrooms

US boardrooms just received a valuable tip. An insider trading case against a former Dean Foods chairman and his gambling buddy is one of the few to reach a company's top echelons. It helps show that bosses aren't above the law and suggests recently reversed convictions won't eviscerate enforcement.

Blockbuster prosecutions of Galleon hedge-fund founder Raj Rajaratnam and other dodgy investors have shaken Wall Street in recent years. Yet, company honchos have gone relatively unscathed. Former McKinsey chief and Goldman Sachs and Procter & Gamble director Rajat Gupta was convicted, but few other executives went down for insider trading or anything else.

On Thursday, though, Dean Foods' ex-chairman, Thomas Davis, and Las Vegas sports gambler William "Billy" Walters were slapped with criminal charges and a civil lawsuit over alleged illicit dealings involving Dean Foods and Darden Restaurants stock. Professional golfer Phil Mickelson will repay nearly $1 million of profit he supposedly made, but he is not accused of any wrongdoing.

The case won't completely remove suspicions that top executives are almost immune from prosecution. Fairly or not, many critics of law enforcement still wonder why more senior bankers and corporate managers haven't been held responsible for the 2008 financial crisis. Pursuing Davis, though, shows that even the onetime boardroom chief of a $1.6 billion food and beverage company can be called to account.

It should also assuage fears on the lawmen's side that a 2014 appeals court decision reversing two insider trading convictions would stymie further cases. Anthony Chiasson and Todd Newman were spared prison because a court decided prosecutors had improperly stretched the law. About a dozen other cases were dropped as a result. But that hasn't stopped the likes of Manhattan US Attorney Preet Bharara from continuing to go after people who illegally tip and trade on corporate secrets.

The charges his office filed on Thursday against Davis, who pleaded guilty, and Walters, who is fighting them, are a case in point. They send a message to Corporate America and denizens of the boardroom should be all ears.