Updated: Includes comments from Mark Cuban and his lawyer.
The Securities and Exchange Commission has charged Dallas Mavericks owner and internet entrepreneur Mark Cuban with insider trading.
The complaint claims that in 2004 Cuban learned of a private offering of Mamma.com (now known as
Copernic) that would decrease the value of his 600,000 shares. It says he then sold off his stake and as a result, reportedly saved $750,000.
"As we allege in the complaint, Mamma.com entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential. Less than four hours later, Mr. Cuban betrayed that trust by placing an order to sell all of his shares," said Scott W. Friestad, deputy director of the SEC's Division of Enforcement."It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market."
Cuban has responded to the complaint and posted a brief statement on his blog Monday afternoon denying the allegations and vowing to fight the charges.
“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,” he said.
The post also includes a statement from his lawyer, Ralph C. Ferrara, Esq. with Dewey & LeBoeuf LLP, saying the matter "has no merit and is a product of gross abuse of prosecutorial discretion," and "that the Commission’s claims are infected by the misconduct of the staff of its Enforcement Division."
Cuban, who is involved in a number of ventures and is currently trying to buy the Chicago Cubs baseball team, is also the majority partner of sharesleuth.com, an independent web-based reporting site aimed at exposing securities fraud and corporate chicanery. Cuban also runs HDNet, an all-HDTV network on DirecTV, which employees former CBS Evening News anchor Dan Rather.
Cuban made his fortune by selling broadcast.com to Yahoo for nearly $6 billion before the tech bubble broke and has developed something of a bad-boy reputation as owner and chief fan of the NBA's Mavericks.
He has the distinction of being levied with some of the largest individual fines in NBA history, so it's not about the money.
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Photo: Flickr/(Brian Solis, www.briansolis.com and bub.blicio.us.)
