WASHINGTON -- Federal regulators have accused billionaire Dallas Mavericks owner Mark Cuban of insider trading for allegedly using confidential information on a stock sale to avoid more than $750,000 in losses.
The Securities and Exchange Commission filed a civil lawsuit against Cuban on Monday in federal court in Dallas. The agency said that in June 2004, Cuban was invited to get in on the coming stock offering by Mamma.com Inc. after he agreed to keep the information private.
The SEC said Cuban knew the shares of stock, put at 600,000, would be sold below the current market price, and a few hours after receiving the information, told his broker to sell all shares in the search engine company.
The commission is seeking to impose financial penalties and confiscate gains from the trades. It is up to the U.S. Attorney in Dallas to determine whether Cuban should face criminal charges.
This could get serious
What's a paltry $750,000 to Mark Cuban? A life-altering event, if the insider trading charge continues to follow the path that landed Martha Stewart in jail. ESPN.com's Lester Munson analyzes Monday's development. Story
"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," Scott W. Friestad, deputy director of the SEC's Division of Enforcement, said in a statement. "It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market."
In a statement posted on Cuban's blog, blogmaverick.com, attorney Ralph C. Ferrara said Cuban would challenge the suit.
"This matter, which has been pending before the Commission for nearly two years, has no merit and is a product of gross abuse of prosecutorial discretion," Ferrara said. "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."
In the same statement, Cuban said, "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."
According to the SEC, the complaint seeks to permanently enjoin Cuban from future violations of the federal securities laws, disgorgement (with prejudgment interest), and a financial penalty.
http://sports.espn.go.com/nba/news/story?id=3708124
The Securities and Exchange Commission filed a civil lawsuit against Cuban on Monday in federal court in Dallas. The agency said that in June 2004, Cuban was invited to get in on the coming stock offering by Mamma.com Inc. after he agreed to keep the information private.
The SEC said Cuban knew the shares of stock, put at 600,000, would be sold below the current market price, and a few hours after receiving the information, told his broker to sell all shares in the search engine company.
The commission is seeking to impose financial penalties and confiscate gains from the trades. It is up to the U.S. Attorney in Dallas to determine whether Cuban should face criminal charges.
This could get serious
What's a paltry $750,000 to Mark Cuban? A life-altering event, if the insider trading charge continues to follow the path that landed Martha Stewart in jail. ESPN.com's Lester Munson analyzes Monday's development. Story
"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," Scott W. Friestad, deputy director of the SEC's Division of Enforcement, said in a statement. "It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market."
In a statement posted on Cuban's blog, blogmaverick.com, attorney Ralph C. Ferrara said Cuban would challenge the suit.
"This matter, which has been pending before the Commission for nearly two years, has no merit and is a product of gross abuse of prosecutorial discretion," Ferrara said. "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."
In the same statement, Cuban said, "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."
According to the SEC, the complaint seeks to permanently enjoin Cuban from future violations of the federal securities laws, disgorgement (with prejudgment interest), and a financial penalty.
http://sports.espn.go.com/nba/news/story?id=3708124
