After winning the liability phase of its securities fraud case against Texas entrepreneur Samuel Wyly and the estate of his deceased brother Charles, the U.S. Securities and Exchange Commission has encountered a major setback in its bid to collect $1.4 billion from the duo.
In a ruling issued on Tuesday, U.S. District Judge Shira Scheindlin in Manhattan precluded the SEC from recovering the total profits it accuses Sam and Charles Wyly of netting from stock trades orchestrated through a secret offshore system. The ruling caps the SEC’s potential recovery in the case at around $750 million as the agency gears up for a damages-only bench trial next month.
