The Securities and Exchange Commission just sent word: In New York federal court today it filed a 78-page complaint charging Sam and Charles Wyly with violating federal securities laws over the last 13 years, during which the SEC alleges the Dallas brothers pocketed more than $550 million in "undisclosed gains." Alleges the SEC, Sam and Charles (the latter of whom is half the namesake of the AT&T Performing Arts Center venue) sat on corporate boards -- among them Michaels Stores Inc., Sterling Software Inc. and Scottish Annuity & Life Holdings Ltd. -- and traded stock "through hidden entities located in foreign jurisdictions to conceal their ownership and trading of those securities."
Along charged in the complaint: their attorney, Michael French, and their stockbroker Louis J. Schaufele III.
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"The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws," says Lorin Reisner, Deputy Director of the SEC's Division of Enforcement, in the evening's press release. "They used these structures to conceal hundreds of millions of dollars of gains in violation of the disclosure requirements for corporate insiders."
In a statement released this evening, attorney Bill Brewer says his clients are innocent of the charges.
"After six years of investigations, the SEC has chosen to make claims against the Wyly brothers -- claims that, in our view, are without merit," Brewer says. "It will come as little surprise to those who know them that the Wylys intend to vigorously defend themselves -- and expect to be fully vindicated. ... At best, we believe the claims filed today are a misapplication of the law. At worst, the claims appear to represent an after-the-fact justification for a misguided six-year investigation."
The entire complaint is available here.