SEC Charges Mark Cuban With Insider Trading | Adweek SEC Charges Mark Cuban With Insider Trading | Adweek
Advertisement

SEC Charges Mark Cuban With Insider Trading

Advertisement

NEW YORK The Securities and Exchange Commission has charged entrepreneur Mark Cuban with insider trading, the agency said Monday. Cuban and spokespeople for him couldn't be reached for comment.

The SEC said its charge stems from Cuban's 2004 sale of 600,000 shares of Internet search engine Mamma.com "on the basis of material, nonpublic information concerning an impending stock offering."

In a statement on his blog, BlogMaverick.com, Cuban and his legal team said he 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."

Added Cuban: "I am disappointed that the commission chose to bring this case based upon its enforcement staff's win-at-any-cost ambitions. The staff's process was result oriented, facts be damned. The government's claims are false, and they will be proven to be so."

The FCC filed its complaint in the U.S. District Court for the Northern District of Texas. It alleges that in June 2004, Mamma.com invited Cuban to participate in its stock offering after he agreed to keep the information confidential.

Within hours of hearing about the offering at a discount, Cuban, knowing it would dilute the holdings of existing shareholders, called his broker and instructed him to sell his entire position in the firm, according to the SEC.

Once the offering became public, Mamma.com's stock price opened 9.3 percent below the previous day's closing price. Cuban avoided losses in excess of $750,000, the SEC said.

"Insider trading cases are a high priority for the commission," said Linda Chatman Thomsen, director of the SEC's Division of Enforcement. "This case demonstrates yet again that the commission will aggressively pursue illegal insider trading whenever it occurs."

Scott Friestad, deputy director of the SEC's Division of Enforcement, added: "It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market."