SEC Obtains Final Judgments in Insider Trading Case

SEC Litigation Releases

Filed February 4th, 2026

Detected February 25th, 2026

Summary

The SEC announced the entry of final consent judgments against Joseph C. Lewis, Carolyn W. Carter, Patrick J. O’Connor, and Bryan L. Waugh in an insider trading case. The judgments include penalties, disgorgement, and prejudgment interest totaling over $2.3 million.

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The Securities and Exchange Commission (SEC) has secured final consent judgments against Joseph C. Lewis, Carolyn W. Carter, Patrick J. O’Connor, and Bryan L. Waugh in a civil enforcement action concerning alleged insider trading. The judgments, entered on various dates in late 2024 and early 2026, permanently enjoin the defendants from violating antifraud provisions of the Securities Exchange Act of 1934 and Rule 10b-5. The defendants are ordered to pay a combined total of $1,636,645.11 in penalties, $545,548.37 in disgorgement, and $95,391.54 in prejudgment interest.

This action signifies the conclusion of the SEC's litigation against these individuals, with the court imposing financial penalties and permanent injunctions. The case involved allegations of Lewis obtaining material nonpublic information through his fund ownership and tipping it to Carter, O’Connor, and Waugh, who then traded on the information. While Carter and Waugh neither admitted nor denied the allegations, the final judgments impose significant financial consequences and prohibit future violations of securities laws. Regulated entities and individuals involved in trading or possessing material nonpublic information should review the details of this case to understand the SEC's enforcement priorities and the potential penalties for violations.

Source document (simplified)

Joseph C. Lewis, Carolyn W. Carter, Patrick J. O’Connor, and Bryan L. Waugh

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26489 / February 24, 2026

Securities and Exchange Commission v. Joseph C. Lewis, et al., No. 1:23-cv-06438 (S.D.N.Y. filed July 26, 2023)

SEC Obtains Final Consent Judgments as to Joseph C. Lewis, Carolyn W. Carter, Patrick J. O’Connor, and Bryan L. Waugh in Alleged Insider Trading Case

The Securities and Exchange Commission announced today the entry of final consent judgments as to Joseph C. Lewis, Carolyn W. Carter, Patrick J. O’Connor, and Bryan L. Waugh in the SEC’s civil enforcement action against Lewis, his then-girlfriend Carter, and his private pilots, O’Connor and Waugh.

According to the SEC’s complaint, filed in federal district court in the Southern District of New York, Lewis obtained material, nonpublic information about two public companies through his majority ownership and control of a biotechnology investment fund. As alleged, Lewis then violated a duty of trust and confidence by tipping this information to Carter, who realized ill-gotten profits by trading in the stock of both companies on the basis of this information. Separately, the complaint alleged that Lewis tipped information about one of the companies to O’Connor and Waugh, who realized ill-gotten profits by trading in that company’s stock on the basis of this information.

The Court entered the final judgments as to Lewis and Carter on November 26, 2024 and February 13, 2025, respectively, and entered the final judgments as to O’Connor and Waugh on February 4, 2026. Carter and Waugh neither admitted nor denied the allegations in the SEC’s complaint. The final judgments permanently enjoin the defendants from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and order them to pay penalties, disgorgement, and prejudgment interest in the following amounts:

| | Penalty | Disgorgement | Prejudgment Interest |
| Lewis | $1,636,645.11 | – | – |
| Carter | $241,154.81 | $241,154.81 | $43,589.44 |
| O’Connor | $24,221.53 | $171,886.12 | $29,257.46 |
| Waugh | $33,126.86 | $132,507.44 | $22,554.64 |

The SEC’s litigation was conducted by Carina Cuellar and Timothy Work and supervised by Jim Carlson and Jim Connor. The SEC’s investigation was conducted by Mr. Work, with assistance from Howard Kaplan, Yongping Zheng, and Kevin Gershfeld, under the supervision of Kevin Guerrero and Mark Cave. 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, the Department of Homeland Security, U.S. Customs and Border Protection, the Federal Aviation Administration, the Securities Commission of the Bahamas, the Swiss Financial Market Supervisory Authority, the Australian Securities and Investments Commission, the National Securities Commission of Argentina, the Central Bank of Uruguay, the UK Financial Conduct Authority, the Cayman Islands Monetary Authority, the Isle of Man Financial Services Authority, and the Autorité des marchés financiers of Quebec.