on whose boards of directors they sat
by creating a labyrinth of offshore trusts and subsidiary entities in the Isle of Man and the Cayman Islands(the “Offshore System”); transferring hundreds of millions of shares of the Issuers’stock to those entities; and installing surrogates to carry out their wishes regardingthe disposition of the stock – all while preserving their anonymity and evadingfederal securities laws governing trading by corporate insiders and significantshareholders.
Attorney French and stockbroker Schaufele were allegedly essentialto the success of this scheme, which also included a singular instance of insidertrading by the Wylys and Schaufele in 1999. The SEC seeks penalties, injunctive
These companies were Michaels Stores, Inc. (“Michaels”), SterlingSoftware, Inc. (“Sterling Software”), Sterling Commerce, Inc. (“SterlingCommerce”), and Scottish Annuity & Life Holdings Ltd. (now known as ScottishRe Group Limited) (“Scottish Re”) (hereinafter collectively referred to as “theIssuers”).
Complaint (“Compl.”) ¶ 2.
¶¶ 1-2, 23-27. Sam Wyly served at various times relevant tothe Complaint as Chairman and Vice Chairman of Michaels, Chairman of SterlingSoftware, Executive Committee Chairman and Board member of SterlingCommerce, and Chairman of Scottish Re.
¶ 15. Charles held similar,though not identical, positions at each of the Issuers.
¶ 16. The Wylyswere not only board members of these companies, but also founders, executives,and significant shareholders – “quintessential insiders” who, in violation of theirfiduciary duties to the Issuers and their shareholders, used their power and controlto realize hundreds of millions of dollars of undisclosed gain.
¶¶ 1, 15-16,74-76.
sections 13(d) and 16(a) of the Securities and Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78m(d), 78p(a).2
Case 1:10-cv-05760-SAS Document 50 Filed 03/31/11 Page 2 of 74