Samuel Wyly, the 79-year-old former Michaels Stores Inc. chairman, says dates sometimes get garbled in his mind. That’s how he explained inconsistencies in his testimony about company sales that are a part of a $550 million insider-trading lawsuit brought by regulators.
Wyly testified for the second day in his own defense today in federal court in Manhattan, denying U.S. Securities and Exchange Commission claims that he and his brother Charles, who died in 2011, used an offshore network of trusts to hide the stock trades.
The Wyly brothers used inside information gained from sitting on the board of Sterling Software Inc. in 1999 to accumulate shares ahead of the company’s $4 billion sale to Computer Associates International Inc., reaping a $31.7 million profit, according to the SEC. Wyly had given sworn statements that Goldman Sachs Group Inc. (GS) was hired in July 1999 to sell Sterling Software and a related company, Sterling Commerce. He changed his account today, testifying that Goldman Sachs wasn’t hired for Sterling Software until later that year.
“I sometimes get it garbled in my mind,” Wyly said, raising a question from U.S. District Judge Shira Scheindlin, who is presiding over the case.
“But you said it twice. So you’re now saying your testimony, then, was inaccurate?” Scheindlin asked. “And that was only six years after 1999.”
Turning around to stare at Wyly, who was seated on the witness stand, Scheindlin said “And today is how many years after 1999? 15? Oh.”
Scheindlin has said she will decide whether the Wylys engaged in insider trading. A jury will make the determination on other federal securities law violations alleged by the SEC. In a second phase, Scheindlin will also determine what penalties or remedies should be imposed if the Wylys are found liable.
Wyly continues his testimony when the trial resumes on April 28. The judge has ruled that Wyly can only testify for about two hours during the trial’s morning session, citing an undisclosed medical condition.
The case is SEC v. Wyly, 10-cv-05760, U.S. District Court, Southern District of New York (Manhattan).
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