The Securities and Exchange Commission (SEC) has charged two brothers with insider trading that amounted to more than US$550m in undisclosed gains.
Samuel and Charles Wyly from Dallas earned the funds whilst sitting on corporate boards and trading stock in the public companies through hidden entities located in foreign jurisdictions in order to hide their ownership and trading.
The SEC said the brothers formed an elaborate fraud system that used trusts and subsidiary companies in the Isle of Man and the Cayman Islands to sell upwards of US$750m worth of stock in four public companies for which they were corporate directors.
The pair was also found guilty of insider trading within a company for a gain of in excess of US$31.7m.
The brothers’ attorney and stockbroker were also charged for their role in the scheme.
Lorin Reisner, Deputy Director from the SEC’s Division of Enforcement said the brothers violated the disclosure requirements for corporate insiders. He said: “The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws.”
ACQ Magazine