Damian Williams, the United States Attorney for the Southern District of New York, has announced the guilty plea of Joseph Lewis to charges of committing securities fraud and conspiring to commit securities fraud through insider trading.
Joseph Lewis was arrested in July 2023 and pled guilty before U.S. District Judge Jessica G.L. Clarke today. In addition, Broad Bay Ltd., a corporate entity owned and directed by Lewis, pled guilty today before Judge Clarke to a superseding criminal information, regarding its participation in a securities fraud scheme to hide Lewis’s ownership shares of a pharmaceutical company through a pattern of false filings and misleading statements.
In connection with this plea, Broad Bay Ltd. has agreed to pay $50 million in financial 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 the Tottenham Hotspur football club, via ENIC Sports, a company controlled by a Lewis family trust. His sentencing hearing is scheduled for March 28.
U.S. Attorney Damian Williams said:
“Today’s guilty pleas once again confirm — as I said in 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 abused inside information he gained through his access to corporate boardrooms to tip off his friends, employees, and romantic interests. Now, he will pay the price with a federal conviction, the prospect of time in prison, and the largest financial penalty for insider trading in a decade. His company, Broad Bay Ltd., who failed to detect and report this misconduct, has also been held to account 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 filings 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 investment organization. By virtue of Lewis’s investments in certain companies, he has controlled one or more board of director seats at those companies and has deputized employees to serve on various company boards. In turn, through these employees, Lewis received material, non-public information about these companies. Lewis, on multiple occasions over the course of several years, misused and misappropriated this confidential information to provide stock tips to various individuals in his life, including his employees, romantic partners, and friends, as a way to provide them with compensation and gifts. These individuals, in turn, traded on the tips provided by Lewis for vast personal gain.
In addition, Broad Bay Ltd. and other corporate entities under the direction and control of Lewis engaged in a scheme to hide Lewis’s ownership and control shares of a pharmaceutical company through a pattern of false filings and misleading statements. Lewis and his companies were required to file schedules of share ownership with the Securities and Exchange Commission (the “SEC”) because he was an owner of 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 reality, he beneficially owned and controlled more than 19.99% of Mirati stock through offshore shell companies and other entities.
As a result of the false disclosure of his ownership, corporate entities under the direction and control of Lewis were able to exercise warrants in Mirati that they would otherwise not have been able to exercise, at vast financial gain. Lewis and certain entities under his control falsely swore on SEC filings to incorrect Mirati share ownership totals on at least 13 separate occasions between in or about November 2013 and in or about November 2017. In or about 2018, the Mirati shares held in offshore entities were sold, and then approximately $25 million in proceeds was transferred to an account controlled by Broad Bay Ltd.
As part of the guilty plea of Broad Bay Ltd., Lewis and Broad Bay Ltd. have agreed Lewis and his companies will resign and relinquish their control over board of director seats and participation in board of director meetings of any corporation publicly traded in the United States, will cease ownership of certain investments over the five year period of probation, will cooperate with the Government’s ongoing investigation and prosecution, and will pay $50 million in financial penalties, including a $15,586,021 fine and $34,413,979 in forfeiture.
Lewis, 86, a British national, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison, and two counts of securities fraud, which each carry a maximum potential sentence of 20 years in prison.
Broad Bay Ltd. pled guilty to one count of securities fraud, which carries a maximum sentence of five years’ probation.
The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of 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 initiated civil proceedings against Lewis.
