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Raymond J. Learsy Headshot

"Its Not About the Money" -- If Only the Texas Wyly Brothers Ran the SEC

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There are still some straight shooters in our midst, and you can count the Wyly Brothers in that category.

The SEC, fresh from their cream-puff settlement with Goldman Sachs, turned around late last month and laid a 78-page complaint on the Wyly Brothers alleging all manner of misconduct. The SEC claimed that the Wylys' 58 trust and offshore corporations -- based in such cozy tax havens as the Isle of Man and the Cayman Islands -- were using hundreds of millions of untaxed dollars to pay for business ventures. Not surprisingly, the SEC's action was filed just days after the SEC's settlement with Goldman Sachs, the timing of which had raised not a few eyebrows. (See "The Goldman Sachs Settlement, the Wall Street Journal, Warren Buffett, and the White House" 07.17.10)

And that is the rub. The timing of the Goldman Sachs settlement was too close to the passage of the Financial Regulations Bill, giving many the impression that one was tied to the other. And then there was the size of the settlement. $500 million -- for a company like Goldman that had allegedly gamed the system for billions -- was almost an insult to the marketplace and to many who found themselves on the opposite side of Goldman deals. The sum was less than 3% of Goldman's 2009 bonus pool alone ($20 billion -- that's $20,000,000,000, in case you are counting).

While the SEC cratered to Goldman, braying their $500 million settlement, thereby surrendering the one opportunity at closing a deep wound to Americans' sense of fair-play. It would have been far more important to America, and to Main Street especially, had the SEC's action against Goldman been settled by a jury. One way or another it would have brought closure to an issue that now still remains an open wound.

Take the Wylys by comparison. Did the SEC, by bringing an action against the Wylys, seek to force a settlement on the Wylys? According to the Wyly brothers, they did nothing wrong. Their position as set forth in a front page New York Times article:

"We made all the shareholders money, we made all the employees money, we did a good job for the customers, we did a good job for the vendors. We did everything you're supposed to do with a company". Continuing, "I could write them a check, but that's not the point. It's not about the money."

Had the SEC taken a page from the Wyly book, much of the pent-up venom surrounding all that has happened within the financial community could at least have been diffused in the knowledge that a jury of American citizens (and not our Wall Street-beholden government) would sit in judgment of Goldman Sachs -- irrespective of the outcome.

Litigate against Sam and Charles Wyly? Whoa! How about having them ride herd on the SEC?