Breaking: SEC charges Mark Cuban
Just received a press release from the SEC that it has charged internet entrepreneur Mark Cuban, 50, with insider trading. The release is here on the SEC’s site and the 9 page complaint (pdf) charges Cuban with insider trading — specifically selling 600,000 shares of Mamma.com Inc., which is now known as Copernic (CNIC) and trades at around 25 cents a share. But back in 2004, when the sale took place, shares were significiantly higher.
Cuban, who I interviewed for this story in Worth magazine two years ago, is clearly a controversial figure. In addition to owning the Dallas Mavericks (and blogging here) about basketball and other things, he also owns HD Net, which managed to attract former CBS anchor Dan Rather. Cuban also funds two other sites: Sharesleuth and the newer, Bailoutsleuth.com. So far, I haven’t seen any response to the SEC complaint on his sites, but I’m guessing that’s only a matter of time. Stay tuned….
UPDATE: I’ve just reread the complaint and the first question that comes to mind is why now, given that the events as outlined in the complaint took place 4 1/2 years ago. According to the complaint, Cuban acquired the 600,000 shares in March 2004 and sold them on June 28 and 29, 2004 after learning from a call with the CEO that Mamma.com planned to do a private placement. The complaint says that Cuban was pretty angry about that, saying to the CEO at the end of the call, “Well, now I’m screwed. I can’t sell.” But then he proceeded to sell the shares. The complaint notes that by getting out in front of the news, Cuban managed to avoid “losses in excess of $750K”.
By odd coincidence, Cuban gave an interview to NPR’s Planet Money last month, during which the reporter asked Cuban a question about how much was too much. Here’s what Cuban said: “You can’t get greedy. You can’t want more, more more…There’s just no reason to risk everything to get more.”
So here’s my questions: why would a billionaire take this kind of risk for $750K? And why would the SEC wait 4 1/2 years to go after him?
UPDATE 3:00: Cuban’s response to the SEC complaint is here.
UPDATE 11/18: Mark Cuban has posted another response to the SEC’s complaint here that basically says the SEC’s key evidence — that Cuban knew he was receiving non-public information and agreed to that beforehand — is not accurate.
Another update: And just in case you still can’t get enough of Cuban, be sure to check out the SECLaw blog which has some interesting legal perspectives on the case.
Be sure to read Dealbook’s take, which includes an email from an SEC employee. Something is definitely not adding up here.
Image source: Ronald Martinez / Getty
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Posted in Tags: insider selling, SEC |
 7 Comments » |
November 17th, 2008 at 1:35 pm
SEC: vindictive much?
November 17th, 2008 at 2:10 pm
Cuban’s defense attorney said he’s just following advice from his financial planner, one L. Dykstra Financial. lol
November 17th, 2008 at 4:18 pm
They probably gave him plenty of time to come clean. When he refused they filed changes against him. My guess is that he thinks he can talk his way out of this mess.
November 17th, 2008 at 4:58 pm
I think it is is waay to suspicious.
why now? why him?
November 17th, 2008 at 8:56 pm
This is total b.s. and typical throw-in-vindictive-persecutions-on-the-way-out-of-the-door immaturity that we’ve grown to expect from this administration. If they prosecute Cuban, they better go after every single investor that ever sold their holdings after receiving a dilutive offering memorandum. This is beyond the pale and the worst part about it is that the investing public doesn’t even understand why.
November 17th, 2008 at 11:34 pm
And why would the SEC wait 4 1/2 years to go after him?
Why indeed? Well, at least one of the SEC’s attorneys was none to fond of Cuban and wasn’t afraid to tell him so in email.
http://norris.blogs.nytimes.com/2008/11/17/insider-trading-or-political-persecution/
November 18th, 2008 at 3:11 am
I think Jenkins has it right on the money. The political attack is just too far, too late, and too close to Obama’s time (not that Obama wouldn’t do the same, if it were true). I’m sure if I slided rules and made $750k, I would be hearing from the gov as well.