Damian Williams, the United States Attorney for the Southern District of New York, announced the guilty plea of Joseph Lewis to charges of securities fraud and conspiracy to commit securities fraud through insider trading.
Joseph Lewis was arrested in July 2023 and pleaded guilty before US District Judge Jessica G.L. Clark today. Additionally, Broad Bay Ltd., a corporate entity owned and operated by Lewis, pleaded guilty today before Judge Clarke to a superseding criminal information relating to its participation in a securities fraud scheme to conceal his ownership interests Lewis to a pharmaceutical company through a pattern of false and misleading statements.
In relation to this claim, Broad Bay Ltd. agreed to pay $50 million in monetary penalties, among other penalties, and to continue to cooperate with the government in this investigation.
Joseph Lewis is a UK-based billionaire investor and businessman whose family owns Tottenham Hotspur football club through ENIC Sports, a company controlled by a Lewis family trust. His sentencing hearing is scheduled for March 28.
US Attorney Damian Williams said:
“Today’s guilty pleas reaffirm – as I said when announcing the charges against Joseph Lewis just six months ago – the law applies to everyone, no matter who you are or how much wealth you have. Billionaire Lewis misused inside information gained through his access to corporate boardrooms to inform his friends, employees and romantic interests. Now, he will pay the price with a federal conviction, the prospect of prison time and the largest insider trading fine in a decade. His company, Broad Bay Ltd., which failed to detect and report this wrongdoing, has also been held accountable and will plead guilty and pay more than $50 million in financial penalties.”
According to the allegations contained in the indictments, superseding information and other depositions and statements made in court:
Joseph Lewis is a billionaire businessman and investor who is the principal owner of the Tavistock Group, an international private equity firm. Through Lewis’s investments in certain companies, he controlled one or more board positions in those companies and has seconded employees to serve on various company boards. In turn, through these employees, Lewis obtained material, non-public information about these companies. Lewis, on numerous occasions over many years, misused and misappropriated this confidential information to provide advice to various people in his life, including his employees, romantic partners and friends, as a way of providing them with compensation and gifts. These individuals, in turn, traded on the tips provided by Lewis for enormous personal gain.
In addition, Broad Bay Ltd. and other corporate entities under Lewis’ direction and control engaged in a scheme to conceal Lewis’s ownership and control of stock in a pharmaceutical company through a pattern of false statements and misrepresentations. Lewis and his companies were required to file stock ownership schedules with the Securities and Exchange Commission (the “SEC”) because he owned more than 10% of the stock of Mirati Therapeutics (“Mirati”). Lewis and entities under his control reported to the SEC that he owned between 16 and 19.99% of the stock when, in fact, he owned and beneficially controlled more than 19.99% of Mirati’s stock through offshore shell companies and others entities.
As a result of the false disclosure of his ownership, corporate entities under Lewis’ direction and control were able to exercise warrants on Mirati that they otherwise could not have exercised, with enormous financial benefit. Lewis and certain entities under his control falsely swore in SEC filings that they would fix Mirati’s total stock on at least 13 separate occasions between or about November 2013 and about November 2017. In or about 2018, the Mirati shares held in offshore entities were sold and then approximately $25 million in proceeds were transferred to an account controlled by Broad Bay Ltd.
As part of Broad Bay Ltd.’s guilty plea, Lewis and Broad Bay Ltd. agreed that Lewis and his companies would relinquish and relinquish their control over board positions and participation in board meetings of any publicly traded company in the United States, would cease ownership of certain investments upon during the five-year probationary period, they will cooperate with the government’s ongoing investigation and prosecution and pay $50 million in financial penalties, including a $15,586,021 fine and $34,413,979 in forfeiture.
Lewis, 86, a British national, pleaded guilty to one count of conspiracy to commit securities fraud, which carries a maximum possible sentence of five years in prison, and two counts of securities fraud, which carries a maximum possible sentence of 20 years. prison.
Broad Bay Ltd. pleaded guilty to one count of securities fraud, which carries a maximum sentence of five years in prison.
The maximum possible sentences in this case are set by Congress and are provided here for informational purposes only, as any sentence for the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation. He also expressed appreciation for the SEC, which previously brought civil proceedings against Lewis.