British billionaire Joe Lewis pleads not guilty to US insider trading charges (updated)

Mirati Therapeutics

26/07/2023 18:46

(Recasts with not guilty plea)
    By Luc Cohen, Jonathan Stempel and Jody Godoy
       NEW YORK, July 26 (Reuters) - British billionaire Joe
Lewis pleaded not guilty to U.S. insider trading charges at a
hearing on Wednesday.
    Lewis entered his plea before U.S. Magistrate Judge Valerie
Figueredo in Manhattan federal court.
    Federal prosecutors accused Lewis, 86, whose family trust
controls a majority of the Tottenham Hotspur soccer team, with
orchestrating a "brazen" insider trading scheme by passing tips
about companies in which he invested to friends, personal
assistants, private pilots and romantic partners. 
    Two of Lewis' pilots, Patrick O'Connor and Bryan Waugh, were
also charged with insider trading securities fraud, and accused
of making millions of dollars in illegal profit from Lewis'
tips.
    Lewis founded the investment firm Tavistock Group, and is
worth $6.1 billion according to Forbes magazine.
    His lawyer David Zornow said prosecutors made an "egregious
error" in bringing charges, and said his client had come to the
United States voluntarily to defend himself against the charges.
    Lawyers for O'Connor, 66, and Waugh, 64, did not immediately
respond to requests for comment. Both have been arrested, while
Lewis surrendered to authorities on Wednesday.
    A spokesperson for Tottenham said in a statement: "This is a
legal matter unconnected with the club and as such we have no
comment."
    Prosecutors said that in 2019 Lewis lent each pilot $500,000
and encouraged them to buy stock in oncology company Mirati
Therapeutics  MRTX.O  before it released favorable clinical
results.
    O'Connor texted a friend that he thought "the Boss has
inside info," according to the indictment. 
    After Mirati announced the positive results, its share price
increased 16.7% in one day, and both pilots repaid Lewis for his
loans.
    In wiring Lewis the repayment, Waugh indicated the money was
a "loan payback for MRTX." 
    Mirati did not immediately respond to a request for comment.
    
    ALLEGED CRIMES SPANNED 2013-2021 
    Lewis was charged with 16 counts of securities fraud and
three counts of conspiracy, for alleged crimes spanning from
2013 to 2021, and could theoretically face decades in prison.
    Prosecutors said Lewis controlled board of director seats at
several companies and deputized employees to serve on boards,
which gave him access to inside information that he then passed
to others.
    "None of this was necessary," Damian Williams, the U.S.
Attorney in Manhattan, said in a statement. "Joe Lewis is a
wealthy man."
    Insider trading has long been a focus of Williams' office,
dating to 2009 when a crackdown began under one of his
predecessors, Preet Bharara.
    O'Connor and Waugh, who are residents of New York and
Virginia, respectively, each face seven counts of securities
fraud and one count of conspiracy.
    Separately on Wednesday, the U.S. Securities and Exchange
Commission filed a civil insider trading case against Lewis,
O'Connor, Waugh and Lewis' former girlfriend Carolyn Carter.
    The SEC said Lewis learned in July 2019 that a biotechnology
company in which he had invested would raise capital through a
private investment in public equity, a transaction that tends to
raise a company's share price.
    Despite being bound by a confidentiality agreement, Lewis
allegedly told Carter, 33, about the transaction in a luxury
hotel room in South Korea, where they were staying.
    Carter then bought $701,000 of stock in the company, which
the SEC did not name, and earned about $172,000 in profit after
news of the private placement caused the stock price to soar.
    A lawyer for Carter did not immediately respond to a request
for comment. Carter is not facing criminal charges.
    "When insiders like Lewis take advantage of their access ...
it erodes public trust and confidence in the fair and efficient
operation of our markets," Gurbir Grewal, director of the SEC's
enforcement division, said in a statement. 

 (Reporting by Luc Cohen, Jonathan Stempel and Jody Godoy in New
York; Additional reporting by Chris Prentice in New York;
Editing by Chizu Nomiyama and Daniel Wallis)
 ((luc.cohen@thomsonreuters.com; +1 646 361 1622; Reuters
Messaging: Twitter: @cohenluc))