SEC charges billionaire Wyly brothers with 13-year fraud
The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, D.C.
TEXT OF INTERVIEW
Bill Radke: The Securities and Exchange Commission continues to step up its profile and its enforcement. In a new civil charge, the agency accuses two prominent Dallas billionaire brothers of making millions in a 13-year fraud. The brothers are known for big contributions to Republican political causes and to charities. Marketplace's Janet Babin is with us live to talk about this. Good morning.
Janet Babin: Good morning, Bill.
Radke: What does the SEC accuse these brothers of doing?
Babin: Well according to the SEC complaint, Sam and Charles Wyly made $550 million in ill-gotten gains through 13 years of basically insider trading.
Radke: And how did they allegedly pull this off?
Babin: The SEC says they traded shares in public companies while they were in positions of power on the boards of directors of those companies, and they didn't disclose who they were or that they owned the companies -- so they made a whopping profit, the SEC's says, at the shareholders' expense. The complaint alleges, too, that the brothers set up trusts and subsidiaries that were based in the Isle of Man and the Caymen Islands. And the public companies involved in the Wyly's scheme are some you might have heard of, including Michaels Stores -- that's the arts and crafts store -- and Sterling Commerce.
Radke: And how have the brothers' responded to the charges?
Babin: Well through their attorney, the two say the charges are completely without merit and that they intend to vigorously defend themselves and they expect to be fully vindicated.
Radke: OK, Marketplace's Janet Babin reporting. Thanks, Janet.
Babin: Thank you, Bill.