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

u can actually go to jail for insider trading i believe....

 

Yes, you can.

Sincerely,

 

This is pretty funny.

 

Martha Stewart actually went to jail for obstruction of justice, not insider trading.

 

Cuban: 'The Government's Claims are False'

Mavericks owner Mark Cuban could have taken two routes in addressing the federal government's civil complaint against him stemming from alleged insider trading: he could have responded calmly and let the story die down David Stern-style, or he could have come out with guns blazing.

On second thought, this is Mark Cuban we're talking about. Blaze away, Mark:

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. 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.

Mr. Cuban stated, "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."

This sort of retort has three tangible repercussions in our world: the story will bounce through the headlines so long as Cuban fights, SEC jokes will become immediately played out (instead of played out in a month or so), and an army of amateur criminologists will spend days ripping through every Cuban quote looking for the silver bullet. (Guilty.) By the way, the call from Mamma.com's CEO which led to Cuban's alleged malfeasance was received in American Airlines Arena, where the Mavs play. Also, it came four days after Dallas traded a future first for Pavel Podkolzine, probably the worst player named Pavel in NBA history. The future first became Linas Kleiza, probably the best player named Linas in NBA history.

(Let me not get away without a snide side remark: Cuban should have his lawyer write all his angry retorts. This was the first one of which I could read without wincing. Wordpress has spellcheck, Mark!)


http://nba.fanhouse.com/2008/11/17/mark-cuban-the-government-s-claims-are-false/

 

Hope he get's jail time and a FAT fine.

This might not be the best place to ask, but what would someone with inside information do in that situation? Announce to all the stockholders, watch the price fall, then sell?

 

he's not going to get jail time.

it's a civil suit not a criminal suit so jail time is impossible.

the ironic thing is that the reason Mark Cuban sold his shares in mamma.com is because he objected to the CEO using a private investment in public equity offering to raise money. PIPE offerings are basically a very shady type of equity raising method which screws current shareholders by diluting their shares' values.

so he was morally objecting to shady business practices by engaging in his own shady practices (dumping w/ insider info)

it's actually very in-character for cuban. smarter than everyone else? check. longterm business acumen? check. moral superiority? check. hubris and superior than thou attitude that screws him? check

 

Why would his dumbass even try this? Hes a freaking billionaire. And he was going to cry about 3/4 of a million? That is like $75 to us regular joes.

 

Insider trading for the Mavs would have helped.

Buncha iso perimeter goons.

 

Am I the only one that thinks this is fishy? Cuban blogs about this in 2005. Nothing happens. Then in 2008, he starts a website called BailoutSleuth.com that brings to light some embarassing information about the bank bailout. All of the sudden, he faces charges. Sounds to me like someone has an axe to grind. He's probably guilty, but he still may be right about the abuse of prosecutor power.

One more thing:

Spoiler

Mavs suck!

 

While the SEC can't impose criminal criminal sactions, the DOJ certainly can. So, for instance, if the insider trading is bad enough, the SEC may refer the case to the DOJ, and there may be two parallel actions -- a civil one by the SEC and a criminal one by the DOJ.

Cuban certainly isn't out out of the water yet as far as as jail time is concerned.

 

In my experience the DOJ indictment usually comes first or simultaneously and the SEC tags along after. I would be suprised if there is anything further here other than the civil action.

 

That's my understanding as well, Sam.

 

Aren't insider trading charges usually brought against someone who unethically ferrets out or is otherwise provided "insider" information. As I understand it Cuban got a letter from Momma plans to raise more capital. This led him to conclude that his shares would de-value so he bailed.

He was offered the information freely-- as were other stockholder I would assume. Is he targeted because he is the or one of the biggest stockholder.

If someone told you that a house would be on fire in half an hour, would you not try and get out before that time arrived.

What's really illegal here?

 

That's apparently not what happened at all, read the complaint on the SEC's website.

 

... but that is what SportsCenter reported...

 

this litigation is a civil suit so cuban isn't going to jail. if a separate criminal action were to hypothetically be undertaken it'd be an entirely different and unrelated matter in the courts.

whatever hypothetical powers the SEC or DOJ have is irrelevant. for this specific legal action there's literally 0 chance cuban will be going to jail. period. it's like saying, well cuban could go to jail if he murders someone tomorrow... so let's act like he could go to jail. yes he COULD go to jail but it'll be an entirely different case than what he's facting now

even if both a criminal and civil trail were being concurrently prosecuted (which is not the case and 99.99999999% will not be the case). legally speaking they would be handled as separately as a civil insider trading case and that hypothetical murder/jailtime case would be. the process is entirely different. burden of proof is different. it's handled by entirely different system of courts with different judges and prosecutors

bottom line, the reason this is a civil case versus a criminal one like martha stewart is because the prosecutors dont have enough to stick a criminal charge

it's figuratively as close to a slap on the wrist as you can get. pay what cuban earned plus penalties. it's nowhere near a criminal case. yes he could go to jail at some point, DOJ certainly has the power to do that. a meteor could also hit the earth tomorrow and we all die. irrelevant

 

the media gets **** wrong all the time so we dont know obviously

but what's being reported is that cuban got an email or a message from the CEO of the website for cuban to call him

phone logs indicate cuban did call him for a couple of minutes then called his broker to sell the shares

according to other sources including cuban's blog, what the ceo told him was that momma was going to planning to do a PIPE offering which pissed off cuban royally because 1)what would devalue cuban's shares 2)cuban considers PIPE bull**** and unethical 3)he was pissed that he wasn't consulted as a major shareholder

there's also reports to the effect that cuban said something like "well **** I cant even sell my shares now (because he now had insider information that would affect the price of his shares)"

why did he do it? that's pretty simple

1) he didn't think he'd be caught. this kind of **** happens every day
2) he prolly morally rationalized it telling himself he wouldn't associate with that kind of company or that he had been screwed
3) there's all kinds of blatant fraud from enron to fanny mae and AIG

he was pretty much right on all those counts. what he didn't count on was bush tanking the economy and needing a whipping boy for regulatory controls of the economy