Eric Watson, seen here on Instagram in Ibiza, is now facing likely sentencing in absentia in an insider trading complaint filed by US regulators. Photo / Instagram
Eric Watson’s cat-and-mouse game with the US Securities and Exchange Commission edged further towards conclusion – and a default judgment – as the last of the controversial New Zealand businessman’s co-defendants settled claims they were engaged.
in insider trading.
The Securities and Exchange Commission (SEC) claims, which were first filed in US courts in July 2021, relate to Watson’s beverage maker Long Island Ice Tea, which joined the crypto bandwagon in 2017 by converting to Long Blockchain. The pivot, carried out at the height of market frenzy over bitcoin, saw shares of the company nearly quadruple in value.
Watson was accused of sharing information about the upcoming rebrand with his friend and broker, Oliver Barrett-Lindsay, with Gannon Giguiere also in on the announcement.
Long Blockchain was subsequently delisted by the Nasdaq exchange after it was determined that the company had made a “series of public statements designed to mislead investors and to take advantage of general investor interest in bitcoin and blockchain technology”.
Watson for his part in several interviews with Herald has defended its conduct over Long Blockchain, denied insider trading, and emphasized that he did not profit from any stock trading around the crypto announcement.
He was not as forthcoming with the SEC as he was with newspapers, however, with the markets regulator struggling to find Watson to provide him with legal papers amid suggestions he was hiding in either Britain or Spain.
In 2022, the SEC convinced the courts to allow him to be served in absentia – with Herald reports cited as evidence Watson was aware of the matter – after announcing their allegations in the international edition of the New York Times.
Court filings before the SEC said the regulator – seeking financial penalties and to bar Watson from involvement in listed vehicles in the US – would delay seeking a default judgment against him until his co-defendants had been dealt with by the courts and the facts of the case was settled.
Advertise with NZME.
While Watson has not become involved in the case, Lindsay settled in early 2022 – formally neither admitting nor denying the complaint, but agreeing to pay a yet-to-be-determined fine – while Giguiere initially chose to defend himself with a week-long trial attempted set off until April.
Giguiere sought to dismiss the case, based on arguments also used by Watson in interviews, claiming that the couple did not have a relationship and that Watson did not receive any benefit. The motion to dismiss was denied in March.
And in a letter filed by the SEC with the court this month, it appears that Giguiere has also opted to settle. “Last week, SEC counsel and Giguiere reached a settlement that, if approved by the Commission and approved by this court, will resolve the SEC’s case against Giguiere,” the filing states.
The settlement is expected to be formalized in December, paving the way for default judgment against Watson.
Watson did not respond to Weekend Herald requests for comment this week.
This latest setback in court represents a further deterioration in Watson’s position as he faces a legal battle on multiple fronts.
The collapse of his New Zealand-based Cullen Group in 2019 – following a judgment it owed $112 million over tax evasion – has seen nearly two dozen of his companies placed into administration.
Despite a long-running circus in which New Zealand liquidators claimed Watson was hiding from document servers, liquidators earlier this year signaled an intention to bankrupt him after securing a $57m summary judgment. in absentia against him personally.
Advertise with NZME.
And a titanic battle with his former business partner, Sir Owen Glenn – waged in international courts for more than a decade, burning tens of millions in legal bills on both sides – has seen Glenn use legal awards to his advantage to hunt down Watson personally . the globe and his family members in New Zealand and in the United States seeking $82 million.
In late 2020, lawyers acting for Glenn managed to get Watson jailed – a rare outcome in a civil case – for contempt of court after finding he had hidden assets in a “rainy weather account” in his mother’s name. Watson served four months in London’s Pentonville prison.