Marcy Gordon, The Associated Press
November 17, 2008 - 10:34 p.m.
WASHINGTON - Federal regulators in the United States charged Dallas Mavericks owner Mark Cuban on Monday with insider trading for allegedly using confidential information on a stock sale of a Quebec company to avoid more than US$750,000 in losses.
Cuban disputed the U.S. Securities and Exchange Commission’s allegations and said he would contest them.
In a civil lawsuit filed in federal court in Dallas, the SEC alleged that in June 2004, Cuban was invited to get in in succession the coming reserve offering by Mamma.com Inc. after he agreed to stay the information private.
Cuban owned 6.3 by means of cent of Mamma.com’s stock at that unoccupied time and was the largest known shareholder in the search engine party, according to the SEC. The agency said Cuban knew the shares would have being sold below the current emporium price, and a few hours afterward receiving the information, he told his broker to sell all 600,000 shares before the public announcement of the sacrifice.
By selling at the time that he did, Cuban avoided losses exceeding $750,000, the SEC said in its lawsuit. On June 30, the first trading day after the announcement, Mamma.com shares opened at $11.89, down 9.3 by cent from the previous day’s close of $13.10.
Cuban, 50 and a multibillionaire, is a tech entrepreneur who sold his Broadcast.com to Yahoo Inc. in 1999 at the height of the dot-com boom. He bought the Mavericks in 2000 and spent heavily to improve the roster.
He is the best known configuration to be accused by dint of. the SEC of illegal insider trading since its question against Martha Stewart in 2002 for allegedly using advance knowledge of negative news for a company to barter her shares and avoid $45,673 in losses. The homemaking diva paid about $195,000 and agreed not to serve for the reason that the director of a public company for five years when exposed to a 2006 settlement with the SEC.
Cuban’s fury over referee calls on the basketball court is legendary, and his verbal outbursts at referees, National Basketball Association officials and sports reporters have raised his profile. He has been fined more than $1 million by the league for a series of episodes dating back to 2000 and suspended from a few games.
“It is fundamentally unfair for someone to use access to non-public information to improperly gain an brink; beginning on the market,” Scott Friestad, the SEC’s deputy enforcement director, said in a statement. The agency alleged that Cuban acted with “scienter,” a legal time indicating knowledge of wrongdoing.
The SEC is seeking a court intellect against Cuban finding that he violated the anti-fraud fare of the federal securities laws, an injunction against that will be violations, an unspecified civil penalty and restitution of the losses Cuban allegedly avoided.
While the stock offering in question occurred again than four years ago, the SEC didn’t learn about the specifics of the case to the time when early 2007, according to agency attorneys.
Cuban’s lawyer said in a statement that the SEC’s case “has nay merit and is a product of gross abuse of prosecutorial discretion.”