SEC v. Joseph C. Lewis; Carolyn W. Carter; Patrick J. O'Connor; Bryan L. Waugh; and Jean J. O'Connor, No. LR-25789, Southern District of New York (July 26, 2023) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25789 / July 26, 2023 Securities and Exchange Commission v. Joseph C. Lewis, et al., No. 1:23-cv-06438 (S.D.N.Y. filed July 26, 2023) SEC Charges Investor Joseph C. Lewis and Associates with Insider Trading The Securities and Exchange Commission today charged investor Joseph C. Lewis for illegally tipping material nonpublic information to his then-girlfriend, Carolyn W. Carter, as well as his two private pilots, Patrick J. O'Connor and Bryan L. Waugh, so that each would use this information to execute trades. The SEC also charged Carter, O'Connor, and Waugh with using that information to trade and reap combined profits of more than $545,000. According to the SEC's complaint, Lewis, a British national who resides principally in The Bahamas, controls and is majority owner of a biotechnology investment fund, from which he often received material nonpublic information concerning the fund's portfolio companies. The SEC's complaint alleges that, between approximately July and October 2019, Lewis breached a duty of confidentiality by illegally tipping material nonpublic information to Carter on at least two occasions and to O'Connor and Waugh on at least one occasion. Specifically, the SEC alleges that, in July 2019, Lewis learned that a company in which the fund had a substantial investment would be raising capital through a type of transaction that often resulted in an increase in share price. Lewis met with Carter in a luxury hotel room the same day he learned this information, and, within three hours of this meeting, Carter bought more than $700,000 worth of the company's common stock. After the transaction's announcement the next day, the company's share price increased by approximately 34.4 percent, and Carter profited more than $172,000. In September 2019, according to the SEC's complaint, Lewis learned material nonpublic information regarding another portfolio company, which had received positive results in a clinical trial that it would present at a conference the following month. Within days, the SEC alleges, Carter and then later O'Connor and Waugh purchased the company's common stock. In O'Connor and Waugh's case, Lewis allegedly gifted this information to them as a substitute for a formal retirement plan and loaned each $500,000 to execute the trades. As alleged, upon the company's public announcement of the positive clinical trial data in October 2019, its share price increased by 16.7 percent, and Carter, O'Connor, and Waugh together profited more than $373,000. The SEC's complaint, filed in U.S. District Court for the Southern District of New York, charges Lewis, Carter, O'Connor, and Waugh with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctive relief and civil penalties from all defendants, as well as disgorgement of ill-gotten gains with prejudgment interest from Carter, O'Connor, and Waugh. The SEC's complaint also names Mr. O'Connor's spouse, Jean J. O'Connor, as a relief defendant. In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Lewis. The SEC's ongoing investigation is being conducted by Tim Work, with assistance from Emily Shea, Howard Kaplan, Yongping Zheng, and Kevin Gershfeld, under the supervision of Kevin Guerrero and Stacy Bogert. The litigation will be handled by Carina Cuellar, Kristen Warden, and Mr. Work, under the supervision of James Connor. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, the Financial Industry Regulatory Authority. SEC Complaint

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25789 / July 26, 2023 Securities and Exchange Commission v. Joseph C. Lewis, et al., No. 1:23-cv-06438 (S.D.N.Y. filed July 26, 2023) SEC Charges Investor Joseph C. Lewis and Associates with Insider Trading The Securities and Exchange Commission today charged investor Joseph C. Lewis for illegally tipping material nonpublic information to his then-girlfriend, Carolyn W. Carter, as well as his two private pilots, Patrick J. O'Connor and Bryan L. Waugh, so that each would use this information to execute trades. The SEC also charged Carter, O'Connor, and Waugh with using that information to trade and reap combined profits of more than $545,000. According to the SEC's complaint, Lewis, a British national who resides principally in The Bahamas, controls and is majority owner of a biotechnology investment fund, from which he often received material nonpublic information concerning the fund's portfolio companies. The SEC's complaint alleges that, between approximately July and October 2019, Lewis breached a duty of confidentiality by illegally tipping material nonpublic information to Carter on at least two occasions and to O'Connor and Waugh on at least one occasion. Specifically, the SEC alleges that, in July 2019, Lewis learned that a company in which the fund had a substantial investment would be raising capital through a type of transaction that often resulted in an increase in share price. Lewis met with Carter in a luxury hotel room the same day he learned this information, and, within three hours of this meeting, Carter bought more than $700,000 worth of the company's common stock. After the transaction's announcement the next day, the company's share price increased by approximately 34.4 percent, and Carter profited more than $172,000. In September 2019, according to the SEC's complaint, Lewis learned material nonpublic information regarding another portfolio company, which had received positive results in a clinical trial that it would present at a conference the following month. Within days, the SEC alleges, Carter and then later O'Connor and Waugh purchased the company's common stock. In O'Connor and Waugh's case, Lewis allegedly gifted this information to them as a substitute for a formal retirement plan and loaned each $500,000 to execute the trades. As alleged, upon the company's public announcement of the positive clinical trial data in October 2019, its share price increased by 16.7 percent, and Carter, O'Connor, and Waugh together profited more than $373,000. The SEC's complaint, filed in U.S. District Court for the Southern District of New York, charges Lewis, Carter, O'Connor, and Waugh with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctive relief and civil penalties from all defendants, as well as disgorgement of ill-gotten gains with prejudgment interest from Carter, O'Connor, and Waugh. The SEC's complaint also names Mr. O'Connor's spouse, Jean J. O'Connor, as a relief defendant. In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Lewis. The SEC's ongoing investigation is being conducted by Tim Work, with assistance from Emily Shea, Howard Kaplan, Yongping Zheng, and Kevin Gershfeld, under the supervision of Kevin Guerrero and Stacy Bogert. The litigation will be handled by Carina Cuellar, Kristen Warden, and Mr. Work, under the supervision of James Connor. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, the Financial Industry Regulatory Authority. SEC Complaint