SEC Charges Mark Cuban With Insider Trading

[winnar111]

http://online.wsj.com/article/SB122693827604333637.html

The Securities and Exchange Commission filed insider trading charges against Mark Cuban, the outspoken owner of the Dallas Mavericks, for allegedly dumping shares in Mamma.com upon learning it was raising money in a private offering (full text of complaint).

The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.



The man's quite an asshole, but this should be interesting.

 

[dmcowen674]

Originally posted by: winnar111
http://online.wsj.com/article/SB122693827604333637.html

The Securities and Exchange Commission filed insider trading charges against Mark Cuban, the outspoken owner of the Dallas Mavericks, for allegedly dumping shares in Mamma.com upon learning it was raising money in a private offering (full text of complaint).

The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.



The man's quite an asshole, but this should be interesting.

Epic fail

Civil != Criminal

 

[JS80]

What a fucking idiot.

 

[daveymark]

so much for him owning the cubbies then...guilty till proven innocent

 

[Arkaign]

I've worked for Mark Cuban before in '03-'04. He's a really energetic guy, very friendly one second, and can turn on a dime and chew someone several new ones. Of all the things Mark is, he's not stupid, he'll wiggle and push through this with no significant problem.

 

[alien42]

i am surprised it took this long. i thought the SEC would go after him for CFSG since he was responsible for a 50% drop in share price just eight months ago.

 

[First]

Originally posted by: Arkaign
I've worked for Mark Cuban before in '03-'04. He's a really energetic guy, very friendly one second, and can turn on a dime and chew someone several new ones. Of all the things Mark is, he's not stupid, he'll wiggle and push through this with no significant problem.

Martha Stewart says hello.

 

[Arkaign]

Originally posted by: Evan

Originally posted by: Arkaign
I've worked for Mark Cuban before in '03-'04. He's a really energetic guy, very friendly one second, and can turn on a dime and chew someone several new ones. Of all the things Mark is, he's not stupid, he'll wiggle and push through this with no significant problem.

Martha Stewart says hello.

Well, I saw that one coming. I could be wrong, but I don't think that the situation is quite the same, and I doubt Mark is as exposed as Martha was. The SEC knows this, and that's why they're pushing for so little.

 

[RightIsWrong]

I find it utterly preposterous that the SEC is going after a single investor who is "probably" guilty of what they are accusing all the while the FED is giving away hundreds of billions to heads of an entire sector that willfully colluded to bilk their shareholders out of their entire investment portfolios by not being honest about the amount of exposure they had to the sub-prime industry and using every accounting trick on the books and inventing a few new ones too.

Oh, the ironing!

 

[smashp]

I wonder if this has anything to do with him creating and funding a site to track the Bailout Monies being handed out.

bailoutsleuth

 

[theeedude]

It's a poltical prosecution.
Bush's SEC settling scores with Obama supporter. They did same thing with Martha Stewart. Wouldn't be surprised if this is thrown out with the whole Bush crew.

 

[Stoneburner]

Martha was convicted of the coverup, not the crime, if I recall correctly.

 

[Robor]

Originally posted by: smashp
I wonder if this has anything to do with him creating and funding a site to track the Bailout Monies being handed out.

bailoutsleuth

Very interesting indeed!

 

[Fern]

I'm a little surprised the SEC can pursue insider trading against an investor who doesn't seem to be an "insider".

Their case seems pretty *thin* to me; it looks to be just a *he said- he said* thingy.

Fern

 

[smashp]

And here is a link to his blog. some interesting commentary about the Economy and such

http://blogmaverick.com/

"Mark Cuban today responded to a civil complaint filed by the United States Securities and Exchange Commission in the United States District for the Northern District of Texas, Dallas Division. In its complaint, the Commission charges that Mr. Cuban engaged in violations of the federal securities laws in connection with transactions in the securities of Mamma.com Inc.

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.?



I mean does it really take the SEC 4 years to file charges.

 

[theeedude]

Originally posted by: smashp
And here is a link to his blog. some interesting commentary about the Economy and such

http://blogmaverick.com/

"Mark Cuban today responded to a civil complaint filed by the United States Securities and Exchange Commission in the United States District for the Northern District of Texas, Dallas Division. In its complaint, the Commission charges that Mr. Cuban engaged in violations of the federal securities laws in connection with transactions in the securities of Mamma.com Inc.

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.?



I mean does it really take the SEC 4 years to file charges.

I am not big fan of Cuban, but I hope he sticks to his guns and sticks it to the SEC scumbags. This organization has done absolutely nothing about the real abuses, and instead given us political show trials.

 

[Stoneburner]

Originally posted by: Fern
I'm a little surprised the SEC can pursue insider trading against an investor who doesn't seem to be an "insider".

Their case seems pretty *thin* to me; it looks to be just a *he said- he said* thingy.

Fern

Insider trading is not limited to insiders, but can extend to anybody who uses inside information.

I do think senseamp is correct. The SEC, like other federal agencies, likes show trials. An investigation can take as long as required but their penchant for going after celebrities is troubling.

 

[piasabird]

That is because it is so hard to prove against large corporations with all their mega lawyers. They will just keep paying out their big bounuses and continue hiding their assets and information. They are so complex it takes an army of accountants to figure anything out. While the single big player in the meantime is easier to track and easier to blame.

 

[Fern]

Originally posted by: Stoneburner

Originally posted by: Fern
snip-

Insider trading is not limited to insiders, but can extend to anybody who uses inside information.
-snip-

If this proceeds, I'll be interested to see how this "inside" info pertains to someone who is an *outsider*.(Edit: Brief check of the rules indicates a "tipee" assumes the confidentiality burden of the insider)

At some point, "inside" info leaked to outsiders is no longer "inside info", just by definition.

I also find the CEO's conduct questionable, it was he who leaked insider info in an attempt to raise more funds for his company (the article says he was trying to get Cuban to invest more money). Surely he knew a PIPE offering would drive the stock price down, why he would *cold call* an existing investor with this news is a mystery; it seems unlikely and/or foolish to me.

I suspect there is more to the story.

Fern

 

[Stoneburner]

Actually I dont know how easy it is for anybody to get away with insider trading. The laws currently allow for shareholders to sue for ANY profit made by an "insider" even if it was fully appropriate. And this is only one set of rules. The evidentiary standard is somewhat bizarre too as merely looking at the effect can be sufficient.

 

[MikeyLSU]

interesting, if this would hold(I hope it doesn't)

It would allow a CEO to "cold call" the big investors and tell them any inside information. At this point the invester would be forced to not sell until that information comes out. Pretty shitty thing to do.

 

[SP33Demon]

He has more money than God. At most, he'll get a slap on the wrist in the end.

 

[LumbergTech]

can someone explain this to me?

I don't really understand what is wrong with dumping stock when a company is going to do something that investors dont like..(and the way you measure that is by them selling their stock)

i mean i can understand , yes, if someone is collaborating with an inside person to work the game it does suck, but i dont see how anyone can honestly claim that it is even remotely realistic that people will not engage in this kind of behavior, it seems like basic common sense that people are going to work in their own favor...

how is this any different than any number of activities where people do everything they can to figure out important information that might cause them to sell or buy stocks?

i cant really imagine why anyone would altruistically just watch 750,000 go down the drain

 

[gsaldivar]

Originally posted by: LumbergTech
can someone explain this to me?

I don't really understand what is wrong with dumping stock when a company is going to do something that investors dont like..

Simple.

It's WRONG when some investors ("insiders") are trading with information that isn't available to the general public. Cuban sold his shares based on information made available to him under a confidentiality agreement. This is information that was not available to the general public.

It's not about being altruistic, it's simply fair play.

Put yourself on the other side of the transaction... If you and I held shares in a company, how would you feel I decide to sell all my shares of that company's stock before a large price decrease, simply because I had "inside" information that put me in a position to know something that you didn't?

Maybe I'm a friend of the CEO or someone else inside the company and privy to some information about an imminent product recall, IRS investigation, or accounting issue...

If I decide to use my "insider" information to game the stock market, knowing that there is no possible way for you to know what I know... is it fair for you to absorb a $750,000 loss, and for me to avoid that loss?

 

[LumbergTech]

Originally posted by: gsaldivar

Originally posted by: LumbergTech
can someone explain this to me?

I don't really understand what is wrong with dumping stock when a company is going to do something that investors dont like..

Simple.

It's WRONG when some investors ("insiders") are trading with information that isn't available to the general public. Cuban sold his shares based on information made available to him under a confidentiality agreement. This is information that was not available to the general public.

It's not about being altruistic, it's simply fair play.

Put yourself on the other side of the transaction... If you and I held shares in a company, how would you feel I decide to sell all my shares of that company's stock before a large price decrease, simply because I had "inside" information that put me in a position to know something that you didn't?

Maybe I'm a friend of the CEO or someone else inside the company and privy to some information about an imminent product recall, IRS investigation, or accounting issue...

If I decide to use my "insider" information to game the stock market, knowing that there is no possible way for you to know what I know... is it fair for you to absorb a $750,000 loss, and for me to avoid that loss?

since when is our system about fairness? the fairness comes in that everyone has an equal opportunity to set themselves up to be in that position to receive that type of information

if they fail to, they fail

i can understand why it upsets people, but i dont see how it is any different than the rest of life

there are many times when i am unaware of opportunities and i miss out on them because of it, i could have all kinds of money if i had known

but i didnt..and i certainly wont blame everyone else and say that they are cheating the system because they know someone who knows something others dont

i still stand by my original position....i believe that it is delusional to expect people not to do what this man did (and the person who helped him)

business is business, and most people do not do business for the purpose of being fair, they do it to get the most money

if anyone should be punished, it should be the person who gave the information (such as a CEO), but it should be because they are betraying other investors who they have an obligation to (supposedly)