Insider trading probe reports scuppered wiretapping efforts: WSJ

Billionaire activist-investor Carl Icahn gives an interview on FOX Business Network's Neil Cavuto show in New York in this February 11, 2014 file photo. REUTERS/Brendan McDermid/Files

(Reuters) - Media reports about an insider trading investigation of golfer Phil Mickelson, sports bettor Billy Walters and activist investor Carl Icahn have derailed government efforts to secretly deploy wiretaps, the Wall Street Journal reported on Sunday.

Federal investigators have been looking into whether Mickelson and Walters may have traded illegally on private information provided by Icahn about his investments in public companies, a source familiar with the matter told Reuters on Friday, confirming reports from other news outlets.

While investigators have been using several types of electronic and human surveillance, they were also considering the use of wiretaps in the probe, the Wall Street Journal reported on its website on Sunday, citing people briefed on the investigation which it did not identify.

Some concerns over the subjects of the investigation suspecting the potential use of wiretaps preceded the public revelation of the probe, the newspaper said.

The investigators believed it was hard to wiretap Icahn without him finding out because he owned a stake in a telecommunications company through which surveillance might have to be conducted, the Wall Street Journal reported, citing one of its sources.

The newspaper also cautioned however that, while the publicity is likely to damage the government’s ability to conduct covert surveillance, investigators can sometimes use publicity to their advantage.

It cited unnamed law enforcement officials as saying that the subjects of investigations will often discuss news reports or take actions as a result of these reports to avoid being caught, and those maneuvers can cause them to get caught.

Representatives of the Federal Bureau of Investigation and U.S. Securities and Exchange Commission, the agencies carrying out the investigation, did not immediately respond to requests for comment on the impact of the news reports on their investigation and any plans to wiretap.

The Reuters source confirming the federal probe has said Mickelson, Icahn and Walters have not been accused of any wrongdoing. Mickelson and Icahn have said they have done nothing wrong while Walters has not responded to several requests for comment.

Reporting by Greg Roumeliotis in New York; Editing by Eric Walsh