Market Cop -GOP Financiers the Wyly brothers charged in massive fraud

Politically connected Wyly brothers charged in massive fraud
Samuel Wyly and Charles Wyly -- billionaire brothers in Texas who have spent millions funding political campaigns -- committed violations of federal securities laws and fraud by using offshore accounts to secretly trade the shares of public companies whose boards they sat on, reaping more than $550 million in profit, according to a Securities and Exchange Commission complaint filed Thursday.
The politically-active Wylys, who have been generous donors to Republican causes over the years, have faced questions in recent years -- including a Senate probe -- about whether they ran an extensive network of tax shelters.
"The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws," said SEC deputy director of enforcement Lorin L. Reisner. "They used these structures to conceal hundreds of millions of dollars of gains in violation of the disclosure requirements for corporate insiders."
The SEC alleges that the brothers created an elaborate network of accounts and companies in the Isle of Man and the Cayman Islands that they used to trade more than $750 million in stock in four public companies they served as board members. The SEC charges that they also committed an insider trading violation concerning one of the companies, earning almost $32 million.
The Wyly's attorney and stockbroker were also charged.
"After six years of investigations, the SEC has chosen to make claims against the Wyly brothers -- claims that, in our view, are without merit," says William A. Brewer III, partner at Bickel & Brewer and lead counsel for the Wylys. "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."
The SEC complaint says the public companies whose shares the Wylys improperly traded include Michaels Stores Inc., Sterling Software Inc., Sterling Commerce Inc. and Scottish Annuity & Life Holdings Ltd.