Monday, November 17, 2008
An SEC press release reports that "[t]he Securities and Exchange Commission today charged Dallas entrepreneur Mark Cuban with insider trading for [allegedly] selling 600,000 shares of the stock of an Internet search engine company on the basis of material, non-public information concerning an impending stock offering."
Use of the word charge may leave the wrong impression. This is not a criminal matter, but rather a civil complaint. The complaint can be found here.
The SEC Litigation Release states in part:
"The Commission's complaint alleges that Cuban violated the antifraud provisions of the federal securities laws by engaging in illegal insider trading in the securities of Mamma.com Inc. ("Mamma.com"), a publicly traded Internet search engine company (now known as Copernic Inc.) based in Montreal, Canada. According to the complaint, in June 2004, Cuban sold his entire 600,000 share position in Mamma.com on the basis of material, non-public information concerning an impending PIPE (private investment in public equity) offering by the company. The complaint alleges that Cuban avoided losses in excess of $750,000 by selling his stock prior to the public announcement of the PIPE offering."
Mark Cuban, owner of the Dallas Mavericks' blog is located here. You'll find that his lawyer is Ralph C. Ferrara of Dewey & LaBoeuf (DC) and that his lawyer is not letting him say much - one quote -clearly a good move. But it looks like this matter has been going on for awhile and the lawyer states "Mr. Cuban intends to contest the allegations and to demonstrate that the Commission’s claims are infected by the misconduct of the staff of its Enforcement Division." More is stated here. This is clearly a case to follow.
Addendum - Liz Moyer & Andrew Farrell, Forbes Magazine, SEC Guns For Billionaire Mark Cuban
NYTimes, Dealbook, S.E.C. Accuses Mark Cuban of Insider Trading