SEC goes back after Mark Cuban…

We were taken by surprise yesterday afternoon when we got a short email from the SEC that it had decided to appeal the insider trading case against billionaire investor Mark Cuban. The email was pretty concise: a short statement from SEC spokesman John Nester that said “As we alleged in our complaint, Mark Cuban violated the antifraud provisions of the federal securities laws by engaging in illegal insider trading in the securities of We believe the District Court erred in dismissing our complaint and we look forward to presenting our position to the Fifth Circuit Court of Appeals. There was also this 2-page PDF.

For those who don’t remember (or whose scorecard isn’t handy) the SEC filed its initial complaint last November, which alleged that Cuban had engaged in insider trading of shares of by selling shares ahead of negative news that a secondary offering would be priced lower than the stock was trading at the time. The actual trading was done all the way back in June 2004, by the way. In the complaint, the SEC said that by selling ahead of the news, Cuban had managed to avoid over $750K in losses.

In July, a federal District Court Judge in Dallas threw out the case and issued a 35-page ruling that said the SEC had failed to prove its case. There’s more about that (and a copy of the ruling) here on Cuban brother Brian Cuban’s site and also from Prof. Stephen Bainbridge, who filed a brief in support of Cuban. Not willing to let sleeping dogs lie, Cuban then turned around and sued the SEC for legal fees last month.

Which brings us to yesterday. Cuban has yet to comment on the situation on his site or his Twitter feed and his brother, has also been quiet on his site and Twitter feed. But Cuban’s attorney, Stephen Best, did tell the WSJ that “—Not only did the SEC lose on the law, but — the SEC could never have won on the actual facts. This appeal is nothing more than the SEC’s desperate attempt to shock a heartbeat into a case that was dead on arrival.

In the interest of full disclosure, provides content to, a site that focuses on the banking bailout that Mark Cuban finances. And while we understand the strong desire to go after big fish to make examples out of them — heck, we do that all the time here at footnoted — this does seem to us, at least, like the SEC is stretching here.

Image source: Ronald Martinez / Getty