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 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, 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 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