A federal jury yesterday found that Maverick Capital and Ranger Capital founder Sam Wyly and his late brother ran an elaborate $550 million insider-trading scheme designed to hide their stock trading from regulators and from the public.
The jury took two-and-a-half days to find the Wylys liable for fraud. The size of the scam amounts to more than half Sam Wyly’s $1 billion net worth; Charles Wyly died in a car accident three years ago.
The Securities and Exchange Commission alleged that the Wylys used an “elaborate sham system” of offshore trusts to trade shares of companies on whose boards they sat. The trusts were designed to illegally conceal the trading, the Wylys’ former lawyer, Michael French, testified.
“We will continue to hold accountable, and bring to trial when necessary, those who commit fraud, no matter how complex their scheme or how hard they try to hide it,” SEC enforcement chief Andrew Ceresney said.
Sam Wyly testified that his lawyers, including French, signed off on the arrangements, and that he would have disclosed the trades if he knew he had to. Wyly was in his home state of Texas yesterday and not in the Manhattan courtroom for the verdict.
“We are deeply disappointed by the jury’s decision,” Wyly lawyer Stephen Sussman said. “Sam and Charles Wyly acted in good faith. We will continue to fight for justice through the next phases of the legal process.”
Neither Maverick nor Ranger were accused of any wrongdoing.