Watson belatedly lawyers up in US case of alleged insider trading
Embattled expat businessman Eric Watson has, nearly three years after the US Securities and Exchange Commission filed claims of insider trading against him, finally appointed lawyers to engage with the market regulator.
Watson’s two co-defendants, Oliver-Barret Lindsay and Gannon Giguiere, have already settled with the SEC. In February 2023, following Watson’s non-appearance and difficulties in serving him documents, US courts declared Watson to be in default and continued the case in absentia.
An update to the court filed last week said a “representative for defendant Watson — who is in default and has not appeared in this case, either pro se [self-represented] or through counsel — has provided the SEC with information concerning Watson’s financial condition”. This marks the first time Watson has engaged with the court proceedings.
The case concerns the 2017 rebranding of Watson’s microcap beverage maker Long Island Ice Tea into Long Blockchain.
The SEC alleges the rebranding was “designed to mislead investors and to take advantage of the general investor interest in bitcoin and blockchain technology” with Lindsay and Giguiere alleged to have profited from the resulting short-lived spike in share price.
Watson, who is alleged to have shared information about the upcoming rebrand with Lindsay and Giguiere, is not said to have financially profited from the insider trading.
The SEC letter said Watson is now represented by Neil Williams and Mark Winters of Gunnercooke UK.
Williams is described on the firm’s website as a partner specialising in cases of “white-collar crime”, while Winters is a former officer with London’s metropolitan police force.
The SEC said it would continue discussions with Williams and Winters and if final settlement agreement could not be reached would “move for . . . a default judgment against Watson”.
The late move in the Southern District of New York court follows a similar eleventh-hour appointment of legal representation at the High Court at Auckland where liquidators of Watson’s Cullen Investments group have been progressing bankruptcy proceedings.
Last month liquidators — having previously secured an uncontested summary judgement against Watson for $59.9 million related to tens of millions of dollars in tax avoidance dating back decades — filed applications to bankrupt Watson, but found he was now represented by Jack Cundy. Lawyers acting for liquidators laid out the two years it took to serve Watson in the case, resorting to having to push papers “under the front gate” of an offshore address and resulting in a High Court judgment describing the defendant as “elusive and obstructive” and sought to avoid further delays.
Cundy told the Auckland court claims Watson had been dodging the case were “not accepted”, and he would be opposing the bankruptcy application and protesting the court’s jurisdiction to hear the matter.
Questions sent this week to Watson about the cases went unanswered.
These developments are the latest in a tectonic crumbling of Watson’s position, from the heights of the NBR rich list and national business celebrity during the 1990s to an apparently impecunious one-time prisoner facing mammoth legal challenges on multiple continents.
A titanic struggle with his former business partner, Sir Owen Glenn — waged in international courts for more than a decade that burnt tens of millions in legal bills on both sides — saw Glenn use court awards in his favour to chase Watson personally, and his family members in New Zealand and in the United States, around the globe seeking $82m.
In 2020 lawyers acting for Glenn managed to have Watson thrown in prison — a rare outcome in a civil case — for contempt of court after finding he had hidden assets in a “rainy day account” under his mother’s name.
Watson served four months in London’s Pentonville prison.