Maverick not probed in Wyly case-source

BOSTON (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.

The Wylys are large philanthropists, and have donated nearly $2.5 million to Republican candidates and committees in the last 20 years, according to the Center for Responsive Politics, which runs the OpenSecrets.org website.

The SEC, in court papers filed in U.S. District Court in Manhattan, said the Wylys used assets in offshore entities to invest about $300 million in hedge funds, including Maverick.

Wyly helped found Maverick more than a decade ago with trader Lee Ainslie, who got his start with hedge fund industry legend Julian Robertson.

Ainslie took full control of the fund firm, which is located in Dallas and New York, in 1995.

While Samuel Wyly, 75, still has money with Maverick, the person briefed on the matter said that the fund's operations would not be significantly impacted even if Wyly removed all of his money.

Hedge funds traditionally allow investors to withdraw their money only a few times a year and it was not immediately clear what Wyly's plans might be.

A call to Maverick's New York office was not immediately returned.

Since Ainslie took full control of Maverick, the firm's core fund had returned an average 13.4 percent a year while the leveraged fund returned 20.9 percent a year.

Investors in the $1.6 trillion hedge fund industry have been especially jittery since a string of high-profile fraud cases, including Bernard Madoff's estimated $65 billion Ponzi scheme was unearthed in 2008. Hedge fund clients are now much quicker to exit at the first whiff of trouble and seek out more frequent reassurance about their investments.

The SEC charges against the Wylys stemmed from a six-year investigation, in which the agency said it found hundreds of instances where information that should have been disclosed was kept from investors.

SEC rules require holders of more than 5 percent of a company's stock to disclose their holdings, and for directors or executives to disclose their purchases and sales.

The Wylys knew or should have known the rules of the road, the SEC said, and yet amassed stakes as high as 16.1 percent to 36.7 percent in the four companies: Michaels Stores Inc, Sterling Commerce Inc, Sterling Software Inc and Scottish Annuity & Life Holdings Ltd.