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SEC v. Wyly

United States District Court, S.D. New York

September 25, 2014

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
SAMUEL WYLY, and DONALD R. MILLER, JR., in his Capacity as the Independent Executor of the Will and Estate of Charles J. Wyly, Jr., Defendants

Decided September 24, 2014.

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For the SEC: Bridget Fitzpatrick, Esq., Hope Augustini, Esq., Gregory Nelson Miller, Esq., John David Worland, Jr., Esq., Martin Louis Zerwitz, Esq., Daniel Staroselsky, Esq., United States Securities and Exchange Commission, Washington, DC.

For Defendants: Stephen D. Susman, Esq., Harry P. Susman, Esq., Susman Godfrey LLP, Houston, TX; David D. Shank, Esq., Terrell Wallace Oxford, Esq., Susman Godfrey LLP, Dallas, TX; Steven M. Shepard, Esq., Mark Howard Hatch-Miller, Esq., Susman Godfrey LLP.

Page 401

OPINION AND ORDER

Shira A. Scheindlin, United States District Judge.

I. INTRODUCTION

The Securities and Exchange Commission (" SEC" ) brought this civil enforcement action against Samuel Wyly and Donald R. Miller, Jr. as the Independent Executor of the Will and Estate of Charles J. Wyly Jr. (" Charles Wyly" and, together with Samuel Wyly, the " Wylys" ). The SEC alleged ten securities violations arising from a scheme in which the Wylys established a group of offshore trusts and subsidiary entities in the Isle of Man (" IOM" ), used those offshore entities to trade in shares of four public companies (the " Issuers" ) on whose boards the Wylys sat, and failed to properly disclose their beneficial ownership of that stock.

The liabilities and remedies phases of the trial were bifurcated. I presided over a jury trial on nine of the ten claims from March 31 to May 7, 2014. On May 12, 2014, the jury returned a verdict against both Sam and Charles Wyly on all nine claims.[1] Following the jury verdict, I set a discovery and trial schedule for the remedies phase.

The SEC now seeks an order of disgorgement against Sam and Charles Wyly in the total amount of $619,298,512.45.[2]

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The SEC also seeks a civil penalty and injunctive relief against Sam Wyly. From August 4 to August 12, 2014, I held a bench trial on all remedies issues except the SEC's alternative disgorgement calculation based on trading profits from the sale of registered securities.[3] For the benefit of all parties, I will now ...


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