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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 2: The backdrop is his super yacht, private plane, soccer team,

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Speaker 2: private investment empire, and luxury lifestyle befitting the richest man

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Speaker 2: in the UK, billionaire Joe Lewis, and now he's one

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Speaker 2: of the most prominent targets of an insider trading prosecution

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Speaker 2: by the Manhattan US Attorney's Office. Prosecutors have charged the

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Speaker 2: eighty six year old billionaire with passing tips to his employees,

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Speaker 2: his friends, and his girlfriend, sometimes on board his super yacht,

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Speaker 2: which he can no longer set foot on because it's

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Speaker 2: part of the collateral for his three hundred million dollar

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Speaker 2: record setting bail package. Joining me is Bloomberg Legal reporter

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Speaker 2: Ava Benny Morrison, who is at the arraignment when Lewis

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Speaker 2: pleaded not guilty. Eva tell us a little about him.

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Speaker 3: Joe Lewis is a eighty six year old billionaire from

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Speaker 3: the UK leave in the Bahamas for decades. He is

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Speaker 3: a man who has a knack for making money. At fifteen,

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Speaker 3: he started working in his family's cafe and turned that

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Speaker 3: into a multimillion dollar restaurant chain. Then he had to

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Speaker 3: go at currency trading and turn those millions into billions

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Speaker 3: betting against the British pound. But he has made his

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Speaker 3: fortune most recently through the Tavistock Group. It's a private

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Speaker 3: investment management firm that has stakes in two hundred businesses

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Speaker 3: in thirteen countries all over the world. In his home

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Speaker 3: country of the UK, he's most well known for his

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Speaker 3: controlling interest in the North London football club Tottenham Hotspur.

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Speaker 2: And he has a three hundred and twenty one foot

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Speaker 2: yat named a Viva. I don't know my yats how

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Speaker 2: big is that?

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Speaker 3: It is huge. This yacht was built around a paddle

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Speaker 3: court that is in the middle of the boat because

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Speaker 3: he loves to play paddle every single day. It has

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Speaker 3: eight individuals, guest suites, helipad Jim, all the bells and

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Speaker 3: whistles that you could imagine for a super yocht. This

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Speaker 3: thing is huge and he spends a lot of his

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Speaker 3: time on it.

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Speaker 2: Prosecutors alleged there was an interesting, actually incriminating conversation on

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Speaker 2: the yacht at dinner in September of twenty nineteen.

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Speaker 3: Because Joe spent so much time on his yacht, he

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Speaker 3: would have a endless rotation of visitors coming on, employees

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Speaker 3: from his biotech hedge fund, different executives from companies that

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Speaker 3: either he personally or his firm had invested in, and

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Speaker 3: they would sit down and have dinner and talk about

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Speaker 3: business and everything else. On this particular night, they were

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Speaker 3: talking about a company called Marati, which is a biotech

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Speaker 3: company that his hedge fund had invested in, and the

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Speaker 3: company was getting ready to release some positive results of

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Speaker 3: a medical trial, but they weren't planning to do it

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Speaker 3: until the following month, and prosecutors alleged that he took

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Speaker 3: that information and then passed it on to his too

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Speaker 3: long time private jet pilots Patrick O'Connor and Brian Wore.

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Speaker 3: They traded on that and allegedly made quite a bit

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Speaker 3: of money. He also passed on that information to his

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Speaker 3: girlfriend at the time. Her name is Caroline Carter. She's

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Speaker 3: a model from the US Virgin Islands. He actually introduced

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Speaker 3: her to trading, helped her open a brokerage account, allegedly

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Speaker 3: gave her money to start that brokerage account, and then

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Speaker 3: her investment strategies were essentially mirroring his. That's the case

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Speaker 3: of the prosecutors.

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Speaker 2: Do prosecutors say what his motive was because he wasn't

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Speaker 2: making any money off the tips, nor did he need

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Speaker 2: any money.

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Speaker 3: That's why this case is a little bit unusual compared

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Speaker 3: to other insider trading cases. You're right, Joe Lewis is

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Speaker 3: a very rich man. He's one of the richest men

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Speaker 3: in the UK. He has an estimated networth of six

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Speaker 3: point six billion dollars. So the personal benefit he was getting,

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Speaker 3: prosecutors allege is the gift of giving these tips to

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Speaker 3: his pilots, to his former love interest, to his friends

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Speaker 3: as well. The SEC has taken it a step further

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Speaker 3: and said that he gave these tips to his pilots

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Speaker 3: as a substitute for giving them a retirement plant. In

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Speaker 3: one instance, he actually loaned each of them five hundred

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Speaker 3: thousand dollars to make trades on a company that was

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Speaker 3: about to post some positive results.

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Speaker 2: Now do we know how prosecutors found out about this?

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Speaker 2: They say he allegedly abused his access to corporate boardrooms

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Speaker 2: something like over eight years.

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Speaker 3: We don't know exactly how prosecutors came across this case.

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Speaker 3: A lot of insider trading prosecutions are referred by the SEC.

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Speaker 3: But looking at the indictment, it's clear to see that

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Speaker 3: they've interviewed a lot of witnesses. They've got a lot

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Speaker 3: of WhatsApp messages between the pilots and some of their friends,

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Speaker 3: passing on some of these tips they allegedly received from Lewis.

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Speaker 3: In some of the messages, one of the pilots even says,

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Speaker 3: nothing to worry about here. These messages are encrypted, so

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Speaker 3: we're all good. And that's pretty damning for Joe Louis.

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Speaker 2: So he's in the Bahamas, but he came to the

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Speaker 2: US voluntarily. They didn't have to try to extradde him

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Speaker 2: like they did with Sam Bakmanfried.

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Speaker 3: Joe Louis lives in the Bahamas, but he came to

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Speaker 3: the US last week as the U. S. Attorney's Office

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Speaker 3: in Manhattan was announcing charges against him. He said that

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Speaker 3: he came voluntarily. His lawyer said the charges were ridiculous

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Speaker 3: and that he wanted to come to face them. He

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Speaker 3: turned up to the FBI at about six thirty in

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Speaker 3: the morning and then was arrested and appeared in court

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Speaker 3: later that day.

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Speaker 2: And what was his demeanor lake in court.

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Speaker 3: Joe Louis appeared in court, sitting next to his lawyer.

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Speaker 3: He looked very relaxed, if not a little bit stoic.

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Speaker 3: He had a perfectly pressed suit on. He said, not guilty,

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Speaker 3: your honor, and his path There was all very much

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Speaker 3: arranged through the prosecutors and his lawyers. He'd traveled to

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Speaker 3: the US in the twenty four to forty eight hours beforehand,

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Speaker 3: surrendered to the FBI earlier that morning, spent a very

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Speaker 3: little time in custody before he was in court, had

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Speaker 3: the bail package or all organized. And this can be

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Speaker 3: very different to how the US government approaches other white

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Speaker 3: collar cases or any criminal cases. Sometimes they go through

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Speaker 3: people's front door, guns drawn and pulling people into custody

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Speaker 3: in the early hours of the morning.

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Speaker 2: Tell us about his bail package, which is record setting.

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Speaker 2: It surpasses sound bankman Freeds by fifty million dollars.

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Speaker 3: This was a custom made bail package for someone who

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Speaker 3: has quite frankly a lot of money. He signed a

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Speaker 3: three hundred million dollar bond and that is secured by

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Speaker 3: his private jet and his superyocht. He can only travel

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Speaker 3: to Florida, Georgia, where he has properties, anti New York

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Speaker 3: as well. He can only use his private jet to

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Speaker 3: travel for court purposes, but he can't even board his

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Speaker 3: superiot and.

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Speaker 2: What about the other do we know? Have they been around?

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Speaker 3: His two private pilots have also been arraigned. They've pleaded

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Speaker 3: not guilty to insider trading. They've also been placed on bail,

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Speaker 3: but their bowl packages are a lot smaller, around two

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Speaker 3: hundred and fifty thousand dollars. Most interesting with his girlfriend

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Speaker 3: is she was named as a defendant in the SEC

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Speaker 3: civil suit, but she's not named or charged by the DOJ.

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Speaker 2: That is interesting and leads one to speculate about why

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Speaker 2: she's not charged. Often that's the sign that someone's cooperating,

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Speaker 2: but we don't know that here and tell us about

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Speaker 2: the SEC charges and this is just starting. Is there

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Speaker 2: any indication of the timing of this?

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Speaker 3: Yeah, it could go one of two ways. His lawyer

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Speaker 3: had a very strongly worded statement saying the prosecutor has

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Speaker 3: made an egregious error in charging him and these are

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Speaker 3: essentially baseless acqua. So Joe Lewis could fight this on

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Speaker 3: principle and make a big deal out of it, but

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Speaker 3: that could take a very long time. Trials can be

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Speaker 3: one two years down the track and he's eighty six

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Speaker 3: years old. Does he want to spend what time he

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Speaker 3: has left in a court room in New York. You

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Speaker 3: wouldn't think so, but he could also possibly reach some

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Speaker 3: sort of plea agreement with the prosecutors, which would significantly

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Speaker 3: shorten the process. The same goes for the two pilots

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Speaker 3: as well as far.

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Speaker 2: As insider treating, which the Southern District has been known

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Speaker 2: for since Bararra. He has to be one of the

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Speaker 2: most prominent charged with insider treating.

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Speaker 3: Definitely. The US Attorney's officer in Manhattan has made inside

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Speaker 3: of trading their bread and butter, and they've got a

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Speaker 3: track record of going after big names and finance big cases.

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Speaker 3: There's been a few prosecutions this year. They announced about

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Speaker 3: just over half a dozen prosecutions in one swoop a

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Speaker 3: few weeks ago. But this is definitely the biggest name

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Speaker 3: in a long time.

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Speaker 2: Thanks so much, Ava. That's Bloomberg Legal reporter Ava. Benny Morrison.

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Speaker 2: Vice Chancellor Jay Travis Lester is a judge on Delaware's

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Speaker 2: Court of Chancery. His reputation a monkish scholar of Delaware law,

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Speaker 2: whose exacting style requires that attorneys come to his court

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Speaker 2: room highly prepared, and who's known for groundbreaking decisions and

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Speaker 2: trying to ensure that the law keeps up with the times.

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Speaker 2: Joining me is Jennifer k, correspondent for Bloomberg Law, who

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Speaker 2: interviewed the Vice Chancellor. One of Judge Laster's first orders

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Speaker 2: after he joined the court back in twenty ten was

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Speaker 2: tough and bold. He kicked several attorneys off a case.

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Speaker 1: All right. So Vice Chancellor Laster, he had been one

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Speaker 1: of these attorneys' litigating cases in the Delaware Court of

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Speaker 1: Chancery for many, many years. He understood how the process works.

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Speaker 1: He had been part of it. And then when he

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Speaker 1: was appointed to the court and stood on the other side,

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Speaker 1: he kind of shook things up because it's a very reserved,

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Speaker 1: kind of cordial, mild mannered world. And you know, one

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Speaker 1: of the first things he did in one of his

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Speaker 1: first or second year as a judge on the court,

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Speaker 1: he said, you know, these attorneys just weren't adequately pursuing

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Speaker 1: the case. They weren't doing their jobs the way that

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Speaker 1: they were supposed to. We saw a shareholder lawsuits before

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Speaker 1: proposing a settlement. So he just immediately removed them from

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Speaker 1: the case. And that kind of set the tone for

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Speaker 1: how he was going to proceed as a judge on

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Speaker 1: that bench, you know going forward that he was going

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Speaker 1: to hold attorneys to a very high standard, the kind

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Speaker 1: of standard that he holds for himself, and.

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Speaker 2: Explained for those who don't know what kind of case

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Speaker 2: has come before the Delaware Chancery Court.

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Speaker 1: So this is a kind of unique court in the

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Speaker 1: American legal system. It's a court that has its roots

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Speaker 1: in colonial era case it has developed into sort of

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Speaker 1: the main venue for mergers and acquisitions cases. It's the

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Speaker 1: main venue for corporate America basically because over half of

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Speaker 1: the Fortune five hundred companies are registered in Delaware. So

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Speaker 1: when their shareholders are angry with the board, or angry

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Speaker 1: with an executive, or the company has done something that

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Speaker 1: needs to be investigated, they go to chancery court. And

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Speaker 1: there are no juries that here the cases in chancery court.

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Speaker 1: It's just the judges who are hearing the arguments. All

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Speaker 1: the judges on the Delaware Court of Chancery are known

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Speaker 1: as vice chancellors. There's one chancellor, six vice chancellors.

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Speaker 2: He's issued some novel or groundbreaking decisions in the last year.

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Speaker 2: Tell us about some of those.

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Speaker 1: So some of the cases that come before the Chancery

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Speaker 1: Court involve shareholder lawsuits that allege that the corporate executives

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Speaker 1: or the boards of directors ignored critical risks. They saw

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Speaker 1: something going wrong and they didn't do enough to stop it.

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Speaker 1: So some of these are the cases that come before

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Speaker 1: Vice CENCEI. Laster. They're known as care mark cases, and

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Speaker 1: they involved really big companies like Walmart and McDonald's, to

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Speaker 1: name two of them. So some of the rulings he's

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Speaker 1: issued in the last year have involved these major companies

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Speaker 1: who have been accused of not doing enough oversight to

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Speaker 1: prevent something bad from happening. In a case involving McDonald's,

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Speaker 1: the judge he extended oversight duties from board members to

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Speaker 1: include company executives. He did this in a way that

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Speaker 1: was explicit. He kind of wrote it down. He wrote

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Speaker 1: it out in a way that no judge had done before.

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Speaker 1: And then there were some other cases. He had, some

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Speaker 1: rulings involving americaurce Bergen, and Walmart that were related to

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Speaker 1: opioid litigation in other courts, And what he did was

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Speaker 1: kind of lay out a new way of calculating the

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Speaker 1: statutes of limitations for shareholders who want to go out

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Speaker 1: after officers or board directors that they say ignored red

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Speaker 1: flags in those opioid cases.

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Speaker 2: So he said, we're not just here for these billion

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Speaker 2: dollar mergers and fights between millionaires and billionaires. What we're

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Speaker 2: here for is to address cases of inequity. His groundbreaking

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Speaker 2: or do his novel decisions often are they expanding corporate

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Speaker 2: liability or corporate responsibility.

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Speaker 1: They are in a way. The whole point of those

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Speaker 1: kinds of cases is to hold a corporation accountable for

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Speaker 1: something that's gone wrong. And what he started to do

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Speaker 1: is give shareholders a little more leeway in pursuing those cases.

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Speaker 1: These kinds of claims, they're called tearmarks claims. They have

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Speaker 1: a reputation for being incredibly difficult for shareholders to win.

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Speaker 1: They can file a lawsuits, but very often when a

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Speaker 1: corporation files a motion to dismiss, the motion to dismiss

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Speaker 1: gets granted because the shareholders haven't been able to prove

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Speaker 1: that something happened within a certain period of time, or

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Speaker 1: they weren't able to show that the executive let's say,

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Speaker 1: you know, actually had those oversight duties that they were

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Speaker 1: supposed to have. What the vice camper is willing to

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Speaker 1: have done is open the door slightly for shareholders who

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Speaker 1: want to hold a corporation accountable for something that's gone wrong.

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Speaker 2: So then I take it he's not beloved by corporate defendants.

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Speaker 1: He has a reputation for being very, very tough on

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Speaker 1: a board. He wants to know that the corporation has

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Speaker 1: has done what it's supposed to do in terms of

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Speaker 1: oversight and also in terms of records keeping. He's not

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Speaker 1: going to take it lightly if a board comes to

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Speaker 1: him with books and records that don't seem complete or

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Speaker 1: seem be lacking information that is sought by shareholders. But overall,

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Speaker 1: you know, he doesn't have a reputation necessarily of being

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Speaker 1: lenient on shareholders or tough on corporations. His real reputation

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Speaker 1: is that he's very tough on the attorneys bringing these cases.

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Speaker 1: He wants to know that the attorneys for either side

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Speaker 1: have done their due diligence and all of their homework,

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Speaker 1: and we'll be able to answer any question that he

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Speaker 1: comes up with in court.

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Speaker 2: Let's talk about the criticism of him. Some say he's

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Speaker 2: going out of his way to rewrite the law and

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Speaker 2: imposing his sense of fairness in cases that really call

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Speaker 2: for a more moderate decision.

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Speaker 1: What his critics say that he's doing that isn't really

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Speaker 1: the Delaware way of doing things, is that he's making

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Speaker 1: these novel rulings when he doesn't necessarily have to. For example,

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Speaker 1: in a McDonald's case where he expanded officer liability, he

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Speaker 1: expanded liability for the corporate executive that kept the case

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Speaker 1: alive for about a month before he tossed out the

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Speaker 1: litigation completely for procedural reasons. And his critics say, look,

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Speaker 1: you know this case wasn't for to feed passed emotion

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Speaker 1: to dismiss He didn't need to expand liability in writing

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Speaker 1: so explicitly the way that he did. If the case

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Speaker 1: wasn't going to succeed, why not just let the case

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Speaker 1: be dismissed without making this extra ruling.

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Speaker 3: You know.

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Speaker 1: The criticism really is kind of like the guide does

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Speaker 1: too much work. But his response to that is, you know, look,

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Speaker 1: this question of officer liability, it keeps coming up in

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Speaker 1: other cases. When the judge sees something come up case

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Speaker 1: after case, he says he just he wants to answer it.

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Speaker 1: So when this question of officer liability came up in

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Speaker 1: a McDonald's case, he decided you know, now's the time

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Speaker 1: to answer it. I've noticed it enough. It's time when

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Speaker 1: we all have an answer and whether the rest of

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Speaker 1: the case should proceed or not.

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Speaker 2: So are his decisions affecting what happens in corporate boards?

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Speaker 1: Yes, what my cancer left and really what the court

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Speaker 1: of Chancery does overall is set the tone for how

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Speaker 1: corporations govern themselves. Again, because you have so many big

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Speaker 1: household name companies registered in Delaware a variety of reasons,

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Speaker 1: often tax reasons. What happens in chancery court is that

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Speaker 1: it sets kind of a guideline for how a board

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Speaker 1: or how executives are going to run the company. Then

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Speaker 1: everybody rule books in a way.

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Speaker 2: So is he sort of, you know, a one man

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Speaker 2: attempt to make the law keep up with the times.

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Speaker 2: Or are other judges in Delaware doing the same thing,

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Speaker 2: only maybe perhaps with a little less flash or attention.

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Speaker 1: I think it's a little bit of both. I think

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Speaker 1: that one thing that this judge does is try to

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Speaker 1: keep the law current with what's happening, like in the

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Speaker 1: greater context of what's happening in corporate America. He tends

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Speaker 1: to show more personality than the other judges on the court,

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Speaker 1: who are you know, maybe they're not looking at exactly

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Speaker 1: the same cases kind of broadly, They're all looking at

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Speaker 1: this question of, well, what does the current laws ay

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Speaker 1: and what does that mean for you know, companies that

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Speaker 1: are trying to merge or companies that are trying to

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Speaker 1: undo a merger because the shareholders are unhappy with it.

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Speaker 1: He has a bit more a nash I guess when

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Speaker 1: he's delivering these rulings.

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Speaker 2: You write about his exacting style, and he said, and

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Speaker 2: you know, the line between a decision being accurate and

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Speaker 2: a decision being idiotic is unfortunately a quite narrow one.

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Speaker 2: Tell us how he approaches these cases, and you know

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Speaker 2: his exacting style.

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Speaker 1: He is known for being a very constructive, but very

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Speaker 1: critical editor. That's what some of his former loss clerk

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Speaker 1: told me. They said he wasn't nice about it, but

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Speaker 1: he would completely shread their work, and because he wanted

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Speaker 1: to get to the heart of a case and wasn't

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Speaker 1: going to let someone's writing kind of get in the

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Speaker 1: way of that. He's as hard on the attorneys in

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Speaker 1: front of him as he is on his law clerks.

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Speaker 1: I've heard him refer to a complaint as floppy and

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Speaker 1: word salad when he was dismissing a complaint earlier this year.

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Speaker 1: His style is very much take no prisoners in a way,

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Speaker 1: but he's doing it in service of corporate law and

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Speaker 1: not just you know, to be kind of mean or

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Speaker 1: critical about it.

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Speaker 2: So on a personal level, he was described as a

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Speaker 2: monkish scholar of Delaware law.

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Speaker 1: The monkish is the word that came up more than

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Speaker 1: once from talking with his law clerks and with the

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Speaker 1: other attorneys who come before him. Everyone who comes before

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Speaker 1: him knows that they really have to do their homework,

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Speaker 1: but they have to know, you know, maybe what the

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Speaker 1: history of the law is, or you know, not just

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Speaker 1: you know the case law, but maybe something contextual about

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Speaker 1: the case law, because there's a good chance that he

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Speaker 1: will bring up that sort of information in court and

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Speaker 1: they need to be prepared to answer that. He's known for,

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Speaker 1: you know, taking time and writing long opinions or delivering eventually,

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Speaker 1: you know, over the course of an hour, to give

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Speaker 1: you not just his opinion on something, but here's every

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Speaker 1: case he's looked at in forming that opinion, you know,

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Speaker 1: going into the case law history, say here's why I'm

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Speaker 1: decided the way that I'm deciding it. And you know,

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Speaker 1: he was described to me as someone who is a searcher,

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Speaker 1: someone who is searching for information, for the truth, for

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Speaker 1: the greater view of what's happening. And to that end,

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Speaker 1: he's been studying Buddhism for a number of years now,

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Speaker 1: and he said, you know this is because he's really

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Speaker 1: attracted to Buddhist principles about being flexible in your point

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Speaker 1: of view, that not everything has a fixed point, that

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Speaker 1: you don't need to be stuck to one way of

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Speaker 1: looking at something or one way of thinking about something,

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Speaker 1: even if you're a previous opinion in a case or

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Speaker 1: a previous opinion in a similar case was one way,

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Speaker 1: you can look at a new case and look at

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Speaker 1: it in a different way and come to a different

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Speaker 1: conclusion and be more flexible with your perspective. He's someone

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Speaker 1: who really deeply, you know, as all judges, he's really

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Speaker 1: deeply considering the case in front of him. He's just

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Speaker 1: bringing a little bit more of acholarly reputation to it.

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Speaker 2: How much is the case load for Delaware judges increasing?

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Speaker 2: And how is that frustrating him?

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Speaker 1: So, yes, the Court of Chancery is a very very

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Speaker 1: busy court. They have chancellors vice chancellors who all have

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Speaker 1: a full docket. There are a number of cases that

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Speaker 1: they actually assigned to magistrates and chancery to handle things

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Speaker 1: like a states or property related disputes, just to kind

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Speaker 1: of lighten their corporate caseloads. Earlier this year there was

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Speaker 1: very much a tidal wave of cases related to flank

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Speaker 1: check mergers and you Know Less or you Know called

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Speaker 1: that situation a back apocalypse because it was just taking

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Speaker 1: up so much of the court's time overall to go

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Speaker 1: through all of these cases that were work so similar.

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Speaker 1: And he said, look, yes, this is what we're here for,

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Speaker 1: but this overwhelming caseload threatens to undermine our decision making.

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Speaker 1: We want to make good decisions, we don't want to

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Speaker 1: be making them in a way that is rushed, you know,

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Speaker 1: that we're not jump into a conclusion because we're not

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Speaker 1: taking enough time with a case. And he has kind

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Speaker 1: of complained about this publicly. He says, because he wants

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Speaker 1: attorneys to be unnotice that they can be part of

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Speaker 1: the solution instead of being part of a problem with

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Speaker 1: the litigation. That maybe if attorneys are bringing a case

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Speaker 1: that shouldn't be there, he'd rather they didn't that they

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Speaker 1: would think about it a little bit beforehand so that

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Speaker 1: he doesn't have to spend time dismissing something that shouldn't

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Speaker 1: be there.

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Speaker 2: Interesting story, interesting judge, Thanks so much, Jennifer. That's Jennifer K,

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Speaker 2: correspondent for Bloomberg Law, and that's it for this edition

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Speaker 2: of The Bloomberg Law Show. Remember you can always get

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Speaker 2: the latest legal news on our Bloomberg Law podcasts. You

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Speaker 2: can find them on Apple Podcasts, Spotify, and at www

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Speaker 2: dot bloomberg dot com slash podcast Slash Law, And remember

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Speaker 2: to tune into The Bloomberg Law Show every weeknight at

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