Sam Wyly, accused of insider trading, has connection to one of the world's largest hedge funds

[ProSense]

Wall Street Journal

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The brothers used their offshore entities to buy expensive jewelry and artwork that was kept in the possession of Wyly family members, according to the SEC. They also used the offshore funds to buy four properties in Aspen, Colo., and a 100-acre horse farm outside Dallas, as well as to contribute to charity, it said.

In addition, the SEC says, the Wyly fortunes funded one of the longest-running and most successful hedge funds in the industry, Maverick Capital. The Wylys used assets in the offshore entities to invest in hedge funds, according to the SEC complaint. They directed trustees to channel about $300 million to entities including the Maverick and Ranger Capital funds, both started by Sam Wyly, the SEC said.

Maverick Capital, founded in 1990, was opened to outside investors in 1993 and has grown to manage $11 billion in assets, according to SEC filings. Sam Wyly started Ranger in 2001 after leaving Maverick, according to a biography on the Wylys' website.

One Wyly family member remains formally affiliated with Maverick: Sam Wyly's son Evan Wyly is a general partner of the firm, according to a recent SEC filing. The SEC hasn't charged Evan Wyly with any wrongdoing. Evan Wyly negotiated a 1999 transaction for his father involving improper use of inside information, while the younger Mr. Wyly was on the board of the issuer, Sterling Software, the SEC said. Messages left Thursday evening at Maverick and Ranger offices in Dallas and New York weren't returned. Evan Wyly, reached in Dallas, declined to comment.

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Ainslie graduated from the University of Virginia and then received his MBA from the University of North Carolina. He founded Maverick Capital at age 29 in 1993 with $38 million in seed capital from Texas entrepreneur Sam Wyly. Maverick has offices both in Dallas and New York and now managers well over $5 billion. They are a long/short equity hedge fund in the 'old school' sense of the word. The truly are a hedged fund as they focus on equities on both the long and the short side. In an interview with McKinsey, Ainslie has said that, "Our goal is to know more about every one of the companies in which we invest than any noninsider does. On average, we hold fewer than five positions per investment professional - a ratio that is far lower than most hedge funds." They focus on exhaustive research and that is their edge. This methodology carries over from his days at Tiger Management, who was also known for their extensive research.

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Maverick not probed in Wyly case: source

(Reuters) - Maverick Capital Management, one of the world's biggest hedge funds, is not being probed by financial regulators who charged the firm's billionaire co-founder Samuel Wyly with fraud, a person familiar with the matter said on Friday.

The hedge fund firm, with $11.4 billion in assets, sought to reassure clients including pension funds and wealthy individuals who had called with questions about the Wyly situation, said this person, who was not authorized to speak about the firm publicly.

Late on Thursday, the U.S. Securities and Exchange Commission announced civil fraud charges against Wyly and his brother Charles. A lawyer for the Dallas-based brothers on Thursday said the case lacks merit.

The septuagenarians are accused of spinning a web of offshore entities over 13 years that let them hide $550 million of gains from trading in stocks of four companies where they served as directors. The SEC also contends the brothers reaped a $31.7 million insider trading gain.

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[The Magistrate]

1. It Damned Well Ought To Be Probed, Ma'am

Generally, the son of a thief steals....