A letter from the SEC to the court said alternate service would likely be sought: "Mr Watson is a New Zealand native whom the Commission believed was residing in Spain. On February 2, 2022, I received a response from the Spanish Central Authority and had it translated; according to the translation, two attempts to serve Mr Watson at the provided address were unsuccessful."
The letter said US regulators had been informed by KPMG, liquidators of Watson's New Zealand businesses, that he owed substantial amounts: "According to KPMG's most recent report, filed January 21, 2022, Mr Watson is indebted to the liquidated entities for approximately 57 million New Zealand dollars."
The most recent liquidators report notes KPMG has recently filed proceedings against Watson in the High Court seeking this sum.
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Start your day with the latest business headlines straight to your inbox.The insider trading complaint, filed by the SEC last year, alleges Watson had tipped off his business associate Oliver-Barret Lindsay in late 2017 of the impending Long Island Blockchain rebrand.
WhatsApp messages between the pair were presented as evidence in court, with one exchange on December 19 seeing Watson share with Lindsay a planned market announcement.
Watson: "Smiling?"
Lindsay: "Laughing ... good job getting that done."
Watson: "When the market sees the deal we may have a $50 stock."
Long Island Iced Tea's closing price that day was US$2.44. The eventual rebrand, on December 21, saw its share price surge to US$6.91. Share trading activity around the time of this spike attracted the SEC's attention.
The SEC alleges Lindsay passed on information from Watson to Californian man Gannon Giguiere, who bought up LTEA shares before the announcement and sold them in the hours afterwards for a US$162,500 profit.
Court filings show Lindsay has elected not to contest the case, with documents filed on February 1 showing he agreed to a settlement with the SEC where, while formally neither admitting or denying the complaint, he agreed to pay a yet-to-be-determined penalty.
The settlement also prevented Lindsay from making any public statement saying he did not admit the allegations, or suggest they were without factual foundation.
The SEC is seeking from defendants any profits from the alleged insider trading, as well as further financial penalties, and orders preventing them serving as officers or directors of US companies.
Requests to Watson for comment on the developments went unanswered over the past fortnight. He last year told the Herald in a statement he would be employing a lawyer to engage with the SEC, but filings show he is yet to join the proceedings.
The SEC case is merely the latest in a series of business calamities for Watson over the past few years. He lost a long-running case with former business partner Sir Owen Glenn in 2018, with frustrated attempts by Glenn to recover an $85m award seeing Watson spend the last few months of 2020 in Pentonville Prison on contempt charges.
His companies also lost a decade-long case against Inland Revenue in 2019 over claims - upheld by the High Court - his 2004 departure from New Zealand, via the Cayman Islands, involved tax avoidance.
That ruling saw IRD begin a still-unsatisfied chase for $112m in back tax, triggering a wave of liquidations in Watson's remaining New Zealand business interests.
Watson, a former New Zealand rich-lister and once the owner of the Warriors rugby league club, was also previously co-owner of Hanover Finance, which left thousands of New Zealand investors hundreds of millions of dollars short after it collapsed at the beginning of the global financial crisis.
