Now in Legal Rebels:
Posted Sep 30, 2013 12:59 pm CDT
Billionaire Mark Cuban faces trial beginning today in a civil insider-trading suit by the Securities and Exchange Commission.
The SEC says Cuban sold his shares in Mamma.com after he learned from its CEO that the Internet search company was planning a private stock offering, report Reuters and the New York Times DealBook blog. According to the SEC’s allegations, the CEO hoped to bring Cuban on board, and Cuban had agreed to keep the information confidential.
Cuban sold his 6.3 percent stake in the company, avoiding a $750,000 loss, the SEC says. The Dallas Mavericks owner maintains the information was not confidential and it was not material.
Cuban’s net worth is estimated at $2.5 billion, while the potential fine is about $2 million, DealBook says. University of Denver securities law professor Jay Brown tells Reuters that the SEC probably preferred to settle. “The fact it is going forward is probably motivated by Mark Cuban’s desire for vindication,” he said.
The federal judge in the case, Sidney Fitzwater, had originally dismissed the complaint, saying the SEC had failed to allege sufficient facts that Cuban was asked not to trade on the information, DealBook says. A federal appeals court reversed. The Wall Street Journal Law Blog had a report in 2010.