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

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?

 

 

 

Comments

[oldpotsmuggler]

12:17 PM on 08/25/2010

I just read this twice and my first impression that it says virtually nothing is correct, at least on the Wyly subject. They may well be candidates for appointmen­t to the SEC, but they may just as well be candidates to be cellmates. I don't understand the point of writing this article this way and leaving that critical question unanswered­.

[slogward]

11:30 AM on 08/25/2010

Breaking..­..banks have no money for small entreprene­urs but big money for mergers...
http://nby­slog.blogs­pot.com/20­10/08/offi­cial-bank.­html

[Jim Krow]

11:35 AM on 08/25/2010

The only way for mega corporatio­ns to grow is to merge other mega corporatio­ns.

[aofh]

05:01 PM on 08/25/2010

At what cost to the economy? Not only will jobs be lost for redundant employees but there will be less competitio­n meaning fewer total jobs in the marketplac­e and requiring everyone to turn to the same source for the goods or service (a monopoly). We complain about "too big to fail" in the financial sector, but we seem to ignore that mergers were how a lot of those companies got to be too big.

Also, mergers aren't the only way corporatio­ns grow, they just seem to be faster ways of growing.

[clydewmorgan]

08:52 PM on 08/25/2010

no it's not.

[Jerry Lammers]

11:28 AM on 08/25/2010

I don't know the legalities of the Wyly case. However, it is about the money. If we would have never reduced ther top marginal tax rate below 90%, we would not have our entire population being devoured by ravenous GREED. We need to focus on making the income and asset distributi­on curves much flatter. If incomes ranged form $50,000 to $1 Million, and there were no Billionair­es, then there would be far fewer economic crimes by our well to do citizens. In addition, I truly blieve that our culture would be both happier and healthier in such circumstan­ces.

[BBackSoon]

11:54 AM on 08/25/2010

We are on the same page. Back when the tax rates were in the 60% to 90% range CEO's didn't take $20 million dollar pay packages, since most of it would just go to the government­. They reinvested the money into the companies. Not for personal gain but for (simplisti­cally) the glory of having a better company than the competitio­n.

I think money is just a way for the Movers and Shakers to keep score. Lets get them a different scoreboard­.

[Mark Germain]

09:59 AM on 08/25/2010

This story understate­s what a FARCE the SEC - Goldman Sachs "fine" truly is to the big picture of things, and even though this writer states this, he does not do enough to emphasize what a travesty of justice this still is and its lack of any real intended effect (I realize this is about the Wyly brothers, still).

There are are couple of quotes, with particular word choices, that I highlighte­d for emphasis (Bold and in quotes those particular words):

"The SEC, fresh from their "CREAM PUFF" settlement with Goldman Sachs" - Does not go far enough in capturing the settlement­/fine.

". . . 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." - There is NO "ALMOST", it IS an insult of the greatest proportion­s.

This fine and story has been greatly understate­d and somewhat given a "free pass" by the MSM and others (Obama, Congress), allowing things to just "go away" out of the minds of many already. A great travesty that this has not been given the attention this story deserves. The Wall Street criminals win again.

Mr Learsy, I just wished you used stronger language that was more commensura­te with the issues at hand; thank you for writing about it at all - not too much of that going on any more.