[Wall Street Journal] SEC charges Mark Cuban with insider trading

Cuban sold 600,000 shares of Mamma.com to avoid a $750,000 loss

Martha Stewart sold 3,928 shares of ImClone to avoid a loss of $45,673


because he is a billionaire does make him exempt from the same charges she faced.

 

edit:

"does NOT make him exempt"

 

http://sports.yahoo.com/top/news?slug=ap-markcuban-insidertrading&prov=ap&type=lgns

SEC charges Mark Cuban with insider trading

By MARCY GORDON, AP Business Writer
37 minutes ago

Buzz Up PrintWASHINGTON (AP)—Federal regulators on Monday charged Dallas Mavericks owner Mark Cuban with 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 in federal court in Dallas. The agency alleged 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 would be sold below the current market price, and a few hours after receiving the information, told his broker to sell his entire stake of 600,000 shares in the search engine company before the public announcement of the offering.

By selling when he did, Cuban avoided losses exceeding $750,000, according to the SEC. At the time of the offering, Cuban was the largest known shareholder in the Montreal-based company, which later changed its name to Copernic Inc.

The SEC is seeking a court judgment against Cuban finding that he violated the antifraud provisions of the federal securities laws, an injunction against future violations, an unspecified civil penalty and restitution of the losses Cuban allegedly avoided.

Unless he is subject to an injunction, Cuban “is likely to commit such violations again in the future,” according to the SEC suit.

Attorneys for Cuban in Washington and Dallas didn’t immediately return telephone calls seeking comment.

Cuban, 50, also owns Landmark Theaters, a large national chain dedicated to independent films, and the HDNet cable television channel.

He is one of the richest people in the world, according to Forbes magazine, which pegged his net worth at $2.3 billion as of March 2007.

 

It's a mistake to assume that just because someone is rich it makes him a good business man. Could he be? Sure. But the fact is that Cuban is way way way way way way way way way more lucky than he is smart. He hit the grand-slam of all grand-slams with broadcast.com - his track record since then? who knows...i'm sure he's had some winners and some losers.

This is not surprising at all to me. Cuban is emotional and reactionary, as far as I can tell.

Putting aside all bias against the Mavericks, for him not to see jail time as a result of this would be ridiculous. First, it is on a much larger scale, economically, then Martha, as pointed out. Second, if there is a precedent set that the worst punishment you get is a slap on the wrist, and requirement to repay what you otherwise would have lost plus interest (which, he's had the opportunity to earn on that saved cash in the meantime), then there is virtually no incentive to not trade on insider information. There's a chance you won't get caught (and can save or make a bunch of money), and if you do, you're no worse off then you otherwise would have been.

 

http://sports.espn.go.com/nba/news/story?id=3708124



WASHINGTON -- Federal regulators have charged billionaire Dallas Mavericks owner Mark Cuban with 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 says Cuban knew the shares 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.

"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."

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.

Mamma.com, a Canadian company, merged with Copernic Technologies in December 2005. Copernic also offers search software and online advertising services. Mamma.com now trades under Copernic's ticker, CNIC.

To read the full complaint, click here.

^

THE CLICK HERE LINK
http://assets.espn.go.com/media/pdf/081117/nba_cubancomplaint.pdf

 

what everyone said. you have to understand that it's a PUBLICLY traded company. All the share holders should be entitled to the same information, otherwise it's just a large pyramid scam.

 

The college SEC is probably pissed as well, just for good measure.

 

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I never understood insider trading. I mean what... You want them to sit there and eat it? Its like, hey Bill that plane is going down tomorrow. You cancel the flight.

 

No one is saying you can't sell the stock. The problem is in that he did it without the rest of the shareholders having the same information. That is illegal and completely unfair.

If Bill didn't tell the airline, the airport, or the rest of the passengers and kept that to himself, he'd be prosecuted for murder.

 

From reading the complaint, he appears to be so totally totally busted, what a dumbass.

My guess - he settles the case and pays back the $750,000 in disgorgment with interest, and pays a civil penalty in the amount of $1-2 million, probably gets an officer or director bar for 5 years also. He's lucky this is only a civil case, so no jail time.

 

he'll get a seven-figure fine also.

 

He's selling the stock, which means someone else is buying it. Don't you think its unethical to sell something to someone when you know its value is going down but they don't?

 

I see the problem with it. But like I said, how can you not. You can't just sit there and eat it thats too painful.

 

We all know Mark Cuban has insider info.

 

lol @ your label (random idiot)

 

Martha Stewart was never charged with insider trading. She was charged with lying to government officials about her insider trading.

 

You can and must. That's the law.

 

LOL - then don't acquire material non-public information if you don't want to screw over other shareholders. Pretty simple.