Joe Lewis charged with insider trading – but what does it mean for Tottenham Hotspur?
Charlie Eccleshare, Matt Slater and more
Jul. 26, 2023
It was shortly after 6am in Singapore, where Tottenham Hotspur’s power brokers are gathered for the club’s pre-season tour, that the news
broke.
It wasn’t about Harry Kane or the club’s search for a centre-back, it was far more serious.
Joe Lewis, whose company ENIC Sports Inc owns the vast majority of shares in Spurs, had been indicted for “orchestrating a brazen insider
trading scheme”. This involved passing information to “romantic partners and his private pilots,” according to the U.S. attorney for the
Southern District of New York, Damian Williams.
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Lewis’ lawyer David M. Zornow said in a statement to Bloomberg on Wednesday: “The government has made an egregious error in judgment in
charging Mr. Lewis, an 86-year-old man of impeccable integrity and prodigious accomplishment.
“Mr. Lewis has come to the U.S. voluntarily to answer these ill-conceived charges, and we will defend him vigorously in court.”
The claims in the 29-page indictment read like the plot of a television drama, involving companies with interests as diverse as Australian
cattle farming and genetic diseases, glamorous locations around the world, and a 98-metre superyacht.
One woman, referred to as “the Girlfriend” is alleged to have made $849,000 (now £657,000) after a tip-off from Lewis about buying stock while
they were staying at the Four Seasons Hotel in Seoul, South Korea, in 2019.
On another occasion, it is claimed one of Lewis’ pilots — “Pilot-1” — texted a friend to say: “Boss is helping us out and told us to get ASAP”,
referring to buying stock in an oncology company called Mirati Therapeutics. Lewis, it is claimed, then transferred his pilots $500,000 each to
do just that.
Another time, the indictment says one of the pilots did not receive the tip early enough to sell before his stock fell. “Just wish the Boss
would have given us a little earlier heads up,” wrote Pilot-1 in an email to his stockbroker.
Even by Spurs’ standards, a club whose managing director of football was banned from all football activities earlier this year (later partially
reduced on appeal), this is a hugely significant development.
On a tour that’s already been clouded by the Kane transfer saga, postponed matches and opponents pulling out, Tottenham are now dealing with
the fallout of one of the most high-profile figures associated with the club facing a number of extremely serious charges.
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Here, The Athletic breaks down what these developments mean for Lewis, Spurs, chairman Daniel Levy and a potential sale of the club, and why —
despite Spurs’ attempts to distance themselves from the development and insist Lewis is not the club’s owner — the view from one financial
crime lawyer is that: “They now have some serious questions to ask themselves.”
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What does the indictment say?
A 29-page document, United States of America v Joseph Lewis, sets out the reasons for charging Lewis, an 86-year-old “billionaire businessman
and investor”.
There are 13 counts of securities fraud, each of which carries a maximum sentence of 20 years in prison; three counts of securities fraud (each
a maximum sentence of 25 years in prison); and three counts of conspiracy (each a maximum sentence of five years in prison).
The U.S. government alleges that between 2013 and 2021, Lewis violated securities laws through inside trading and submitting false and
misleading filings with the United States Securities and Exchange Commission (SEC), which enforces the law against market manipulation.
They accuse him of using inside information about companies in order to tip off friends and associates, including “his personal pilots,
personal assistants, romantic partners”, so that they could profit from the information by trading securities in advance of disclosure to the
public.
The indictment alleges that Lewis did this “as a way to give them compensation and gifts”, despite already being a billionaire, and that he
“tipped his personal pilot and encouraged them to trade”. Lewis has a net worth of £5.096 billion, according to the 2023 Sunday Times Rich
List.
The document says that “using the information stolen by Lewis”, he and his employees, romantic partners and friends were able to “collectively
make millions of dollars by insider trading” in the stocks of four companies: Solid Biosciences, Mirati Therapeutics, Australian Agricultural
Company, and BCTG Acquisition Corporation.
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Lewis is also alleged to “conspired with others to defraud Mirati Therapeutics, the investing public, and the SEC” by “amassing beneficial
ownership” of more than 20 per cent of the oncology company and “hiding” that “undisclosed ownership”.
The charges have been described as “ill-conceived” by Lewis’ lawyer.
US attorney for the Southern District of New York, Damian Williams (Photo: Getty)
What else does the indictment tell us?
Lewis is a “significant shareholder” in Solid Biosciences (SLBD), a biotechnology firm that develops treatments for a genetic disease known as
Duchenne muscular dystrophy.
The indictment says Lewis was staying in the Four Seasons Hotel in Seoul with “the Girlfriend” in July 2019. Before news of a clinical trial
was made public, Lewis “tipped the Girlfriend and told her to purchase SLBD stock”, which it is said she did — logging into her brokerage
account, checking her balance and then using “nearly all of her available funds to purchase 150,000 shares of SLBD for approximately $700,000”.
The next day, it is claimed, Lewis and the woman flew to Massachusetts on his private plane. During the flight, Lewis told his pilots — Pilot-1
and Pilot-2 — that he had purchased a large share of SLBD and “they should buy the stock as soon as possible”, which they eventually did.
In July 2019, SLBD’s share price increased by “approximately 34.4 per cent”. In August, the results of the clinical trial were released and the
share price went up by another 23 per cent, and then an additional 43 per cent.
“The Girlfriend subsequently sold her SLDB shares for a profit of approximately $849,000, for a 118 per cent gain,” the indictment says. The
pilots also sold their stock for profit.
In January and February 2019, flooding caused significant damage in Queensland, Australia. At the beginning of February, according to the
indictment, Lewis began receiving updates about how it might impact the Australian Agricultural Company (AAC), which operates cattle farms and
in which Lewis “beneficially owned a majority of stock”.
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On or around February 10, before any information was public, Lewis is said to have called his pilots and told them to trade their AAC stock as
soon as possible. They could not complete the transaction, however, before an announcement sent AAC’s stock price down by 12.3 per cent. “Just
wish the Boss would have given us a little earlier heads up,” said Pilot-1 in an email to his stockbroker.
Here’s another case study: Mirati Therapeutics
The indictment cites the case of Mirati Therapeutics, a publicly listed company on the Nasdaq stock exchange that works on therapeutics for
cancer treatment. Lewis is one of the company’s largest shareholders, and has a seat on the board, which is occupied by an employee of a hedge
fund of which Lewis was the beneficial owner.
This employee shared information about Mirati with Lewis, including “information about clinical trials, the timing of corporate announcements,
and planned presentations”. In 2019, Mirati was conducting a major clinical trial and Lewis received a confidential update (via the employee of
his hedge fund) to say that the trials had gone positively. The employee shared this information with Lewis aboard his yacht — the “98-meter
super yacht known as the Aviva” which “at times serves as Lewis’s primary residence” — which was docked in California.
Lewis’s yacht Aviva docked in London back in 2007 (Photo: Getty)
The indictment says the hedge fund employee and Lewis discussed how the company’s share price may rise from approximately $80 (now £62) per
share to in excess of $100 per share. It says Lewis then called a woman, described in the indictment only as “the Girlfriend”, to provide her
with material non-public information about Mirati and told her to purchase stock. She called her stockbroker the following morning, telling the
broker “time is of the essence” and, after placing trades, she told Lewis, “All good and confirmed”.
One month later, Lewis received additional information about the timing of Mirati’s announcement of its clinical trial results. On October 10,
2019, two pilots flew Lewis from San Diego to the Bahamas, and Lewis “told the pilots to purchase as much Mirati stock as they could”. Both
pilots acquired stock the day after they flew Lewis. One of the pilots, while communicating with the other on a messaging service, wrote: “All
conversations on app is encrypted so all good. No one can ever see.”
Then, on October 15, 2019, Lewis wired $500,000 each to the pilots, which the indictment says was as a loan to purchase additional stock. One
of the pilots sent a text to say he thought “the Boss has inside info” and “knows the outcome” because “otherwise why would he make us invest.”
Lewis also told his executive assistant to purchase Mirati stock before the scheduled announcement of the clinical trial results, as well as
three others friends, “including one with whom he was romantically involved and another with whom he sometimes played poker in Argentina”.
When Mirati’s share closed 16.7 per cent up from the previous day’s close on October 29, 2019, the two pilots, “the Girlfriend”, Lewis himself,
and Lewis’s assistant and friends sold their shares of the profits for a profit. The pilots subsequently repaid their loans to Lewis, but
without any interest charged.
What does this mean for Tottenham Hotspur?
Tottenham Hotspur is not mentioned by name in the indictment; only that Lewis is the “principal owner of the Tavistock Group” and its
investment portfolio includes “hundreds of companies, including in agriculture, sports, resort properties, and life sciences”.
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At 7am UK time (around eight hours after the story broke), Spurs issued the following statement: “This is a legal matter unconnected with the
club and as such we have no comment.”
Given Lewis’s long-standing relationship to the club, this raised some eyebrows. Lewis has been synonymous with Spurs since ENIC bought Alan
Sugar’s 29.9 per cent stake for £22million (then around $32m) in December 2000.
“It very much is an issue for Spurs,” says Evan Wright, a financial crime lawyer at JMW solicitors. “It’s a live issue for them and very
serious for Lewis… They (Tottenham) now have some serious questions to ask themselves.”
But Lewis ‘ceded official control’ of Spurs in October 2022, didn’t he?
Technically, yes. But, in reality, not a lot changed, and the noises coming out of Spurs at that time were that it was business as usual.
The club’s steer last year was that the decision was part of the restructuring of the Lewis Family Trusts, with one eye on the long-term future
(Lewis turned 86 in February). The day-to-day running of the club would be unaffected and Spurs remained essentially Lewis’s club.
The Athletic’s report on the change at Companies House, the UK’s registrar of companies, described it like this: “The key point here is that
Tottenham Hotspur is still essentially Joe Lewis’s club. ENIC Sports Inc. owns 85.56 per cent of the club’s shares. And, to quote from the
club’s website, ‘a discretionary trust of which certain members of Mr J Lewis’s family are potential beneficiaries ultimately owns 70.12 per
cent of the share capital of ENIC.'”
That was an uncontroversial and widely reported take at the time, with the headline: “Tottenham Hotspur is still Joe Lewis’ club“.
Unsurprisingly, the club’s tune has changed in the last 24 hours, with Tottenham disputing Lewis can still be called the “owner” of the club.
Lewis in discussion with Daniel Levy at White Hart Lane in 2014 (Photo: Getty)
But it is perhaps worth pointing out that Lewis effectively controls just over 60 per cent of the club’s shares (70.1 per cent of ENIC’s 85.6
per cent). The rest of ENIC’s shares are owned by Levy and his family via a similar set-up of discretionary trusts.
And, as The Athletic wrote in October, the close relationship between Lewis and Levy is still important at Tottenham. They have been working
together for almost 30 years, ever since Lewis met Levy and made the younger man — still in his early thirties — his protegee and point man.
Levy still tends to refer to the majority shareholder as ‘Mr Lewis’, even though it is Levy who is the public face of Tottenham.
When Lewis ceased to be a “person with significant control” at Companies House, he was replaced by Bryan Antoine Glinton, a Bahamian lawyer,
understood to be one of the officers of the Lewis family trusts which owns the shares in Spurs, and Katie Louise Booth, a British solicitor
based in the Bahamas who was said to have “managed the consolidation, preservation and succession of some of the world’s wealthiest
entrepreneurs”.
However, Lewis’s attitude to who really controls the trusts that have been set up to hold his investments is another point made in the
indictment.
In a section about the creation of an offshore trust that was set up in 2013, “purportedly for the benefit of his granddaughter”, to allegedly
buy more shares than Lewis was personally allowed to own in a Canadian life sciences firm, the indictment notes: “Although Lewis was not the
named beneficiary of the trust, he considered himself as the beneficial owner of the trusts.”
What does this mean for a potential sale of the club?
In the short term, nothing good. Anyone who was thinking about doing business with Lewis is now thanking their lucky stars that they didn’t.
That said, anyone who was in serious talks with Lewis or any of his businesses should have learned about this potential obstacle to completion
during their due diligence process.
And that may be why the recent rumours of interest in Spurs -— and other leading European clubs — from American media and sports company
Liberty Media appear to be stuck in the gravel trap.
Spun off from an American cable-TV business in 1991, Liberty Media entered the national conversation when they acquired Major League Baseball’s
Atlanta Braves in 2007. In the following years it would add satellite and online radio network SiriusXM and a stake in America’s biggest chain
of bookshops, Barnes & Noble, to its large portfolio.
But Liberty Media became international news in 2016 when it bought F1, the world’s biggest motorsport property. And it has done a phenomenally
good job of running that business.
In a recent interview on a business podcast, Liberty Media’s chief executive Greg Maffei admitted it has been looking at English Premier League
clubs. He did not name Spurs but several sources, who wish to remain anonymous to protect relationships, have told The Athletic that talks with
the north London club went beyond the “pleased to meet you” stage.
This is hardly a surprise, as Lewis has been in “make me an offer” territory with Spurs for years. Chelsea co-owner Todd Boehly and his
business partner Jonathan Goldstein tried to buy the club a decade ago via their UK property business Cain Hoy.
Lewis has been in “make me an offer” territory with Spurs for years (Photo: Getty)
But Liberty Media’s relationship with Spurs goes beyond interested shopper and potential seller: they are already in business together. In
February, it announced that it was building its first “in-stadium electric karting facility and London’s longest indoor track” below the club’s
stadium.
So, Liberty Media and Spurs have been going round and round in circles for some time.
Could Liberty Media, or some other wealthy individual, company or group, finally see the chequered flag and buy Tottenham?
Of course, and while Tuesday’s revelations make that unlikely in the coming weeks and months, they could make it more likely in the
medium-to-long term.
Lewis and his family are unlikely to need the money to put up a good legal defence but do they need the added scrutiny that a Premier League
team brings? Might this be a good moment to cash in dad’s chips and do something else?
Once everyone has got over the shock of this week’s news, there will be no shortage of people thinking the answer to those questions is “no”
and “yes”, which means it could be a good time to call Glinton and Booth and enquire about the football team they control.
And in the last 18 months alone, there have been rumours of bids from Singaporean internet tycoon Forrest Li and Paris Saint-Germain owner
Qatar Sports Investments.
They never got off the grid either but someone will buy Spurs eventually. You cannot be “kind of” for sale for that long and never do the deal.
A Premier League club with a high-profile figure facing legal action. Haven’t I heard that before?
Many were asking on Wednesday how comparable this situation is with Roman Abramovich’s position after the former Chelsea owner was sanctioned
by the UK government following Russia’s invasion of Ukraine in February 2022. In that instance, the Russian oligarch’s UK assets were frozen
and Chelsea had to operate under a special licence before the club was sold.
“There are similarities in principle,” says Wright. “(But) there are always factual differences. However, I come back to the question the club
(Spurs) must ask: is this a fit and proper person to own the club?”
The Premier League’s owners’ and directors’ test — the OADT, formerly known as the fit and proper persons’ test — means that any prospective
owner, part-owner or club director must meet a number of requirements if they are to be allowed to perform one of those roles by a Premier
League club, and this will be reviewed every year.
The threshold for what counts as “control” was lowered from 30 per cent to 25 per cent in March, and a number of disqualifying events were
added — including potential disqualifications for individuals or companies under government sanctions or those under investigation for “conduct
that would result in a ‘Disqualifying Event’ if proven”.
Tottenham, however, argue this does not apply to Lewis because he is no longer considered an owner or director under the Premier League test
since he “ceded control”.
In another potential parallel with the Chelsea situation, however, Wright says the freezing of assets is a possibility and would give the case
a UK dimension.
The indictment makes it clear that the U.S. authorities will pursue “any and all property, real and personal, that constitutes or is derived
from proceeds traceable to the commission of said offences”.
Could there be any similarities between this situation and Abramovich’s departure from Chelsea in 2022? (Photo: Getty)
If any of “forfeitable property” cannot be found because the defendant has somehow hidden it, given it to a third party, placed it beyond the
court’s jurisdiction, it has lost value or has been mixed with other assets which cannot be easily divided, the U.S. will go after other
property belonging to the defendant of the same value.
“Cases like that often come with an assets-restraint order that is enforceable in different jurisdictions because, as you can imagine, someone
like that could have assets all over the world,” explains Wright.
“That could cause an issue for him in terms of trading his shares. That in turn could cause a problem for Spurs. That’s where it gets really
serious.
“If banks in this country think Joe Lewis’ transactions in the UK may be linked to the proceeds of crime, they are obliged to make a report to
the NCA (National Crime Agency) under their own anti-money laundering measures.
“It could give the banks assurances that they can continue to deal with this guy. But there will be lots of people now — Spurs, the banks,
individual companies — who are asking themselves questions about whether they can deal with Joe Lewis.
“The banks could say we can’t deal with you. If they do, the banks could say to Lewis, ‘We’ll freeze your account until such time as we’re
given permission to do something else with it. That’s a possibility.”
Given Lewis’s company ENIC owns the vast majority of Spurs, should any of the above happen that would have major ramifications for the club.
Let alone the fact that he could face serious jail time.
What happens now?
The next substantive stage is that Lewis must disclose his position on each of those counts on the indictment. The expectation after his
lawyer’s initial statement is that he will deny all of them, but this should become clearer over the next few weeks.
Assuming he pleads not guilty, there will be a trial where the defence and prosecution will serve their evidence. In the UK this whole process
could take two to three years to resolve, but in the US things are expected to move more quickly.
“It seems that he’s going to run a trial,” Wright says. “He’s certainly denying these matters. Whether they will reach a deal on some of the
counts on the indictment, I don’t know because some evidence may be stronger than others. They may well cut a deal, which you can’t do in this
country.
“There are counts on the indictment that justify a 20-year prison sentence. Some justify a five-year one, and if he, for example, made some
admission of liability with respect of some of the minor charges it may be he doesn’t go to prison at all and therefore his position is much
better in respect of continuing in the businesses he’s still in.
“Whether Spurs would be able to justify his involvement in the club is another question.”
What else do we know about Joe Lewis?
Lewis, born above a pub in east London in 1937, is a self-made billionaire.
He left school at 15 to work for his father’s catering company and quickly displayed a flair for making money.
He made his early fortune from the Beefeater pub chain, before earning serious money from playing currency and futures markets.
He set up the Tavistock Group, which now has more than 200 assets across 15 countries. One of Tavistock’s assets is the investment firm ENIC.
In 2001, ENIC bought a controlling stake in Tottenham. Lewis entrusted Levy with the day-to-day running of the club, and has always been
extremely detached.
Lewis chats with Tiger Woods during the 2012 Tavistock Cup in Florida (Photo: Getty)
He attends Tottenham games very rarely (on average less than one per season) and usually for specific reasons, such as the first game at the
new stadium or the 2019 Champions League final. His last match was Tottenham’s home win over West Ham last March.
He is understood to watch matches from the big screens on his 98.4-metre yacht Aviva III, where he has his own trading desk, surrounded by his
billion-pound art collection. His collection is said to include work from Picasso, Matisse and Freud.
Yacht-tracking data from the website Vessel Tracking reports the Aviva is currently in Italy where it appears to be docked at Porto Ercole in
Tuscany.
Over the last few months it has been cruising around the Mediterranean, docking at Malaga in Spain, Gibraltar and Malta before spending the
last two months along the Italian coast.
Lewis spends most of his time in the Bahamas, home of his 600-acre Albany resort. It is, according to Lewis’ company’s website, jointly owned
with Tiger Woods, Ernie Els and Justin Timberlake. He also owns huge amounts of land in places like Orlando, Florida and Argentina.
Additional reporting: Adam Crafton
(Lead graphic: Sam Richardson, Mark Leech/Offside, Catherine Ivill/Getty Images)
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