US regulators on Thursday charged Samuel and Charles Wyly, two billionaire brothers whose interests range from software to restaurants, with reaping more than $550m in undisclosed gains by trading shares in companies on whose boards they sat.

The Securities and Exchange Commission alleged that the Wylys created a “elaborate sham of trusts and subsidiary companies” in off-shore jurisdictions to sell $750m in stock in Michaels Stores, Sterling Software, Sterling Commerce and Scottish Annuity & Life Holdings. The brothers held board seats on all four companies.

“The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade securities laws,” said Lorin Reisner, deputy director of the SEC’s enforcement division. “They used these structures to conceal hundreds of millions of dollars of gains in violation of the disclosure requirements for corporate insiders.”

The SEC also charged Michael French, the Wylys’ attorney, and Louis Schaufele III, their stockbroker.

The Wylys, along with Mr French, “knew or were reckless in not knowing their legal obligations” to disclose stock transactions as directors of public companies, the SEC alleged.

William Brewer III, the Wylys’ lead counsel, said the SEC claims “are without merit.” He said: “It will come as little surprise to those who know them that the Wylys intend to vigorously defend themselves – and expect to be fully vindicated.”