For decades Joe Lewis traded everything from currencies and real estate to football clubs and art, amassing the fortune that has allowed him to travel the world on private jets and his 98-metre yacht Aviva.
But on Wednesday the octogenarian Bahamas-based billionaire surrendered to US authorities in New York after prosecutors charged him on allegations of insider trading spanning almost a decade.
An indictment unsealed on Tuesday casts a harsh spotlight on a mysterious investor known for flashy trades and acquisitions, most notably London’s Tottenham Hotspur, one of the best known clubs in global football.
Prosecutors portrayed a man who used inside information gleaned from investing in public companies to tip off his friends, romantic partners and personal pilots — two of whom are also facing criminal charges — to trading opportunities.
However, his lawyer David Zornow of Skadden Arps said the US government had made an “egregious error in judgment in charging Lewis, an 86-year-old man of impeccable integrity and prodigious accomplishment”, adding that the firm would vigorously defend the billionaire against the “ill-conceived charges”. Lewis pleaded not guilty on Wednesday and was released on bail.
Within the documents is the accusation that in October 2019 Lewis lent two of his private pilots $500,000 each to buy stock in Nasdaq-traded Mirati Therapeutics. They later repaid the loans.
One of the pilots told a friend over text that he thought “the Boss has inside info” and “knows the outcome” because “otherwise why would he make us invest”, according to the indictment.
An employee of the hedge fund through which Lewis held a significant shareholding in Mirati allegedly joined Lewis that September on his yacht, which was docked in California. The prosecutors claim the hedge fund employee shared non-public information with Lewis about “positive developments” in a clinical trial.
The prosecutors allege that Lewis also told his assistant and three friends to buy Mirati shares before the company announced details of the clinical trial.
In another instance, prosecutors claimed a board member at the Australian Agricultural Company had told Lewis the company had suffered “material” losses from flooding in Queensland because it had no insurance on its cattle.
Lewis allegedly told the two pilots that they should sell AAC stock they had previously purchased “as soon as possible”. However, their stockbroker “was unable to execute their sell orders” before the company announced the news in February 2019.
“Just wish the Boss would have given us a little earlier heads-up”, one of the pilots emailed in response to an apology from the stockbroker, according to the indictment.
Prosecutors also allege that Lewis shared confidential information about another biotechnology company, Solid Biosciences, with a girlfriend during a stay at the Four Seasons Hotel in Seoul. Lewis is alleged to have told her to buy its stock after he was informed about a positive clinical trial and forthcoming fundraising.
The girlfriend bought $700,000 of shares in Solid Biosciences, using up nearly all the money in her brokerage account, according to the indictment. Once the company had disclosed information about the clinical trial, the girlfriend is alleged to have sold her shares at a profit of about $849,000.
The two pilots are also alleged to have profited on Solid Biosciences after Lewis tipped them off on the flight from South Korea to the US. They pleaded not guilty.
Bob Frenchman, a New York lawyer who specialises in defending charges of securities fraud, said the “brazen allegations” in the indictment against Lewis made it a “blockbuster case”, but that it was lacking “an explicit request for something in return”.
While the benefit to an alleged tipper can be personal as well as financial, “the contours of personal benefit have not been fully litigated,” he added.
Until recently, Lewis was best known as the majority owner of Tottenham, a north London club that plays in the Premier League. However, corporate filings show that he relinquished control of Spurs in October 2022.
Tottenham is held by Bahamas-based ENIC, a company majority-owned by a family trust that the club says counts “certain members” of Lewis’s family as “potential beneficiaries”. The club has been subject to takeover interest from US and Qatari investors over the years, as foreign investors have been lured into the Premier League.
“This is a legal matter unconnected with the club and as such we have no comment,” Tottenham said.
Lewis was born in an east London pub in 1937, a decade in which US securities laws were being reformed in response to the market abuses of the Great Depression. After dropping out of school aged 15, he joined the family catering business and went on to establish a chain of themed restaurants.
He left the UK in 1979 and moved to the Bahamas and a change of tax regime. His Tavistock Group owns stakes in more than 200 companies in 13 countries and art by Pablo Picasso, Henri Matisse and Lucian Freud.
But Lewis was also part of the generation of traders that transformed foreign exchange markets away from being just the humdrum business of servicing corporate deals or trade and towards a playground for speculators and big hitters in leveraged macro trading.
Like Hungarian-born hedge fund trader George Soros, Lewis is known for betting against sterling and profiting from Britain’s exit from the European exchange rate mechanism in 1992.
Lewis has previously confirmed that “Black Wednesday” gave him one of his biggest gains but rejected criticism for targeting the Bank of England.
‘’All it proved was that the markets were right and the politicians were wrong,” he told the New York Times in 1998. “It’s part of making a market. It’s the free flow of cash around the world.”
Despite a reputation for shrewd trades, Lewis swallowed a $1bn loss after buying shares in Bear Stearns in 2007, a year before JPMorgan rescued the Wall Street bank amid the credit crunch.
His nickname among FX traders at banks was “Two Scoops”, according to a former trader who dealt with Lewis, because “any time he did a trade he would wait a few minutes to see how the market digested it. If it went his way, he would buy another lot”.
“He’s no Soros,” the former trader said. “East End geezer, fingers in many pies”.
Unlike Soros, who was educated at the London School of Economics, Lewis was “a proper old-fashioned Englishman”, said one banker who knew him.
“He was a serious guy and he traded serious amounts,” said another former trader. “He was legitimately risk-taking in a very unforgiving market that makes fools of most people pretty quickly.”
Additional reporting by Joe Miller in New York
https://www.ft.com/content/c999c2d9-1d57-471f-9cd8-70432d039709
