Tags: Wyly | offshore | trading | tax

Wylys Found Liable of Using Offshore Trusts to Hide Trades

Monday, 12 May 2014 01:29 PM

Samuel and Charles Wyly used a web of offshore trusts to illegally hide their stock holdings and evade trading limits, a federal jury found, leaving Samuel and his brother’s estate potentially liable for as much as $550 million.

The jury of eight women and four men today delivered the verdict in federal court in Manhattan in favor of the U.S. Securities and Exchange Commission. The regulator claimed the brothers hid ownership of shares of companies on whose boards they sat and broke disclosure regulations by failing to tell it the full extent of their offshore holdings.

The SEC seeks to impose penalties and force Samuel Wyly, 79, and the estate of his brother, who died in 2011 at 77, to turn over $550 million of allegedly illegal gains. U.S. District Judge Shira Scheindlin, who oversaw the trial, will determine whether the Wylys committed insider trading and will impose any penalties.

The SEC, among its claims, alleged the Wylys made $31.7 million by accumulating shares of Sterling Software Inc. in 1999, ahead of the company’s $4 billion sale to Computer Associates International Inc.

The Wylys claimed they used the offshore trusts for tax purposes, estate planning and asset protection. They said they never concealed the offshore trusts and relied on the advice of “an army of lawyers” they trusted to ensure they complied with the law.

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