Case Against Wyly Brothers Will Do Little to Improve SEC's Tarnished Image

The SEC's charges Thursday against billionaire brothers Sam And Charles Wyly, while likely warranted, are really just another thinly veiled attempt by the SEC to make people forget about their inept handling of the Madoff case, says Scott A. Meyers, a veteran securities litigator at Ulmer & Berne LLP in Chicago.  The SEC claims that the Wyly brothers hid $550 million in trading profits by using an elaborate but bogus system of offshore entities.  The suit, which follows a six-year investigation, accuses the brothers of sham trusts and subsidiaries in the Isle of Man and the Cayman Islands to avoid disclosure of their stakes and sales of stock in public companies where they were directors.

"Presumably, this 'high profile' case is another attempt by the SEC to make people forget about its handling of Madoff, Mr. Meyers says.  "With sweeping allegations of nefarious off-shore entities in exotic locations engaging in widespread international financial conspiracies, the SEC's complaint reads like a Ludlum novel.  But in reality, even if the SEC prevails here, this case is unlikely to help the SEC improve its image, particularly since it took  six years to investigate the transactions at issue, some of which took place as far back as 1992.  So while it may be of some comfort to investors that the SEC is now bringing big cases against big players, the fact that it may take almost twenty years for them to do so is somewhat troubling."

Mr. Meyers is available for interviews on this matter and the SEC's campaign to rehabilitate its reputation. [07/30/2010]