Court Dismisses SEC Insider Trading Case Against NBA Owner Cuban
FILE - In this May 26, 2009 file photo, Dallas Mavericks owner Mark Cuban, center, walks out of his federal hearing accompanied by members of his legal team at the Earle Cabell Federal Courthouse in Dallas. A federal judge on Friday, July 17, 2009 dismissed an insider trading lawsuit against Cuban. (AP Photo/Tony Gutierrez, file)
(Tony Gutierrez - AP)
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
Saturday, July 18, 2009
Mark Cuban, the online entrepreneur and Dallas Mavericks owner known for his on-court antics, yesterday escaped charges of insider trading.
Cuban's defense was vindicated as a federal court in Dallas dismissed a Securities and Exchange Commission civil complaint that he avoided $750,000 in losses by trading based on confidential information about the Internet company Mamma.com.
The ruling marks a key point in the billionaire's confrontation with the SEC, which has 30 days to refile the case. During the case, Cuban launched counterattacks on the SEC from his blog.
The case also took a bizarre turn with the release of an e-mail that an SEC official wrote to Cuban to excoriate him for allegedly backing a movie about the Sept. 11, 2001, terrorist attacks. Later, Cuban sued the SEC for more information about the official and the agency's investigation.
"Its been a great day so far, and its only going to get better! Back to Dallas to see the Fam!!" Cuban wrote yesterday on his Twitter account, which has nearly 85,000 followers. An hour later, he added: "Thanks for all the kind words everyone! As far as media, im not going to be commenting at all, but thx for asking."
In the past, Cuban, who sold an Internet company to Yahoo in 1999 for billions of dollars and has since acquired the HDNet channel and a chain of movie theaters, has gotten into trouble in pro basketball, getting fined more than $1 million by the National Basketball Association for booing and cursing players. He faced his most serious charge, though, last November, when the SEC filed its insider trading case.
The SEC alleged that in June 2004, Cuban received a confidential briefing from the chief executive of Mamma.com, a search site, about a plan to sell additional shares at a below-market price. The plan would dilute the value of existing shares, of which Cuban owned 600,000. After learning of the plan, Cuban quickly dumped his investment.
Mamma.com -- now known as Copernic -- went forward with the offering. The stock declined. The SEC claimed Cuban avoided more than $750,000 in losses.
Cuban's defense was that he had no legal responsibility to refrain from trading on the information and had never agreed to do so.
Judge Sidney A. Fitzwater said in his order dismissing the case that the SEC had not proved that Cuban had a legal responsibility not to trade based on the information. The judge left the door open to the SEC filing an amended complaint if it can show Cuban had agreed not to trade based on the information.
Legal experts said they expect the SEC to make such a filing.
Scott W. Friestad, associate director of the SEC's enforcement division, said: "We are reviewing the court's ruling and weighing our options."
