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LEGAL WOES

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

British billionaire and Tottenham Hotspur football team owner Joe Lewis (C) with his legal team after surrendering to authorities to face an indictment on insider trading charges at United States federal court in New York, New York, US, 26 July 2023. (Photo: EPA-EFE / JUSTIN LANE)

The British billionaire Joe Lewis pleaded not guilty on Wednesday to orchestrating what prosecutors called a ‘brazen' insider trading scheme by passing tips about companies in which he invested to friends, private pilots and a former girlfriend.

Lewis (86), whose family trust controls a majority of the Tottenham Hotspur soccer team, entered his plea before US Magistrate Judge Valerie Figueredo in Manhattan federal court.

Prosecutor Nicolas Roos says Lewis would be released on $300-million bond secured by his yacht, named the Aviva, and private aircraft.

Two of Lewis’ pilots, Patrick O’Connor and Bryan Waugh, also pleaded not guilty to related insider trading charges, after being accused of making millions of dollars in illegal profit from Lewis’ tips. Their bail was set at $250,000 each.

Lewis founded the investment firm Tavistock Group, and is worth $6.1-billion according to Forbes magazine. He wore a grey suit to his arraignment, and was not handcuffed.

David Zornow, his lawyer, said in a statement that prosecutors made an “egregious error” in bringing charges, and said his client had travelled to the United States voluntarily to defend himself against the charges.

Lawyers for O’Connor (66) and Waugh (64) declined to comment after the hearing.

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 before it released favourable 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.

‘NONE OF THIS WAS NECESSARY’

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 US 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 US Securities and Exchange Commission (SEC) 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.)

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