January 30, 2024

Joseph Lewis, a British billionaire investor, and Broad Bay plead guilty to insider trading charges

On January 24, 2024, the US Attorney’s Office for the Southern District of New York announced that British billionaire investor Joseph Lewis, the principal owner of international private equity company Tavistock Group, pleaded guilty to charges associated with an insider trading scheme.  Broad Bay Ltd., a company owned and directed by Lewis, also pleaded guilty to a superseding criminal information, and agreed to pay $50 million, among other penalties, for failing to detect and report Lewis’ misconduct.  In July 2023, the USAO and the Securities and Exchange Commission charged Lewis and his two private pilots, Patrick O’Connor and Bryan Marty Waugh, for their roles in the scheme.  Lewis allegedly gifted each of the pilots with a trading tip and $500,000 as a substitute for a formal retirement plan.  In connection with Lewis’s plea, US Attorney Damian Williams stated that “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.”

According to court documents, Lewis obtained material nonpublic information (“MNPI”) about certain companies in connection with investments that enabled him to control one or more board of director seats for those companies, which led him to deputize employees to serve on those boards.  Over the course of several years, Lewis allegedly misappropriated the MNPI he obtained, and provided certain friends and colleagues, including O’Connor and Waugh, with stock tips intended to serve as gifts or forms of compensation.  These individuals allegedly traded on the tips provided by Lewis and realized significant profits.  According to federal prosecutors, Lewis also used Broad Bay and other companies under his direction and control to file false and misleading statements with the SEC that misrepresented the true number of shares that Lewis controlled in Mirati Therapeutics, a pharmaceutical company, and his beneficial ownership interest in that company.  As part of the guilty pleas, Lewis and Broad Bay agreed to cooperate with the government’s ongoing investigation and also agreed to resign and relinquish control over their board of director seats; end their participation in board of director meetings for any company that is publicly traded in the United States; and cease ownership of certain investments during a five-year probation period.

Specifically, Lewis pleaded guilty to two counts of securities fraud and one count of conspiracy to commit securities fraud for his role in the scheme, while Broad Bay pleaded guilty a single count of securities fraud.   Lewis is scheduled to be sentenced on April 4, 2024.  Litigation against co-defendants O’Connor and Waugh continues.

USAO SDNY Press Release | Indictment (Lewis) | Indictment(Lewis et al.) | Superseding Information (Broad Bay)| Docket – Minute Entries