Bad move Mark… didn’t you see what happened to Martha? Cuban claims the accusation is false… who knows, the whole situation seems odd. From ESPN.com:
WASHINGTON — Federal regulators have accused billionaire Dallas Mavericks owner Mark Cuban of insider trading for allegedly using confidential information on a stock sale to avoid more than $750,000 in losses.
The Securities and Exchange Commission filed a civil lawsuit against Cuban on Monday in federal court in Dallas. The agency said that in June 2004, Cuban was invited to get in on the coming stock offering by Mamma.com Inc. after he agreed to keep the information private.
The SEC said Cuban knew his stake — pegged at 600,000 shares, or 6 percent ownership in the company — would be sold below the current market price after learning that Mamma.com was raising money through a private investment in a public entity (also known as a PIPE).
A few hours after receiving the information, Cuban told his broker to sell all shares in the search engine company, according to the suit.
The Commission is seeking to impose financial penalties and confiscate gains from the trades. It is up to the U.S. Attorney in Dallas to determine whether Cuban should face criminal charges.
“As we allege in the complaint, Mamma.com entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential. Less than four hours later, Mr. Cuban betrayed that trust by placing an order to sell all of his shares,” Scott W. Friestad, deputy director of the SEC’s Division of Enforcement, said in a statement. “It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market.”
According to the Wall Street Journal, Christopher Clark, a lawyer for Cuban, said, “We’re shocked. We find it incredible that given all the important issues that the SEC has to address with regard to today’s economy they’ve sought to bring a $750,000 case relating to a he-said she-said about one trade against a person whose integrity has never been questioned before with regard to the securities markets.”
Clark also said he was “further shocked because the whole enforcement process was tainted by express bias by enforcement officials and certain other misconduct that we will happily detail to the judge in this case.”
In a statement posted on Cuban’s blog, blogmaverick.com, attorney Ralph C. Ferrara said Cuban would challenge the suit.
“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,” Ferrara said. “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.”
In the same statement, Cuban said, “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.”
According to the SEC, the complaint seeks to permanently enjoin Cuban from future violations of the federal securities laws, disgorgement (with prejudgment interest), and a financial penalty.
“Insider trading cases are a high priority for the Commission,” Linda Chatman Thomsen, director of the SEC’s Division of Enforcement, said in the statement. “This case demonstrates yet again that the Commission will aggressively pursue illegal insider trading whenever it occurs.”
Cuban’s situation is drawing comparisons to Martha Stewart’s involvement in insider trading in 2001. Stewart was also charged with obstruction for lying to FBI investigators. She was convicted in March 2004 on charges of conspiracy, obstruction of justice, and two counts of making false statements and was sentenced to prison.
Mamma.com, a Canadian company, merged with Copernic Technologies in December 2005. Copernic also offers search software and online advertising services. Mamma.com now trades under Copernic’s ticker, CNIC.
The NBA had no comment.
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WatchMojo NewsletterFrom ESPN.com:
Fox Sports has decided to pull its bid on the next round of television rights for the Bowl Championship Series college football games.
Fox’s four-year deal with the BCS ends after the 2009 season (and the games in January 2010). The Bowl Championship Series says it is close to a deal with ESPN.
“Currently, over 98 million homes receive ESPN,” BCS coordinator John Swofford said in a statement. “With the ever-changing technology and as we look toward January 2011, when the first games in this package will be played, we know that the number of households that receive ESPN will only continue to grow.”
SportsBusiness Daily reported that, according to sources, ESPN bid $125 million per year over four years to get the games, while Fox’s top bid was $100 million per year.
A statement from Fox on Monday read, “Even with today’s vast economic uncertainties, Fox Sports made a very competitive bid to keep broadcasting BCS games free to every home in America, one that included a substantial rights fee increase, and certainly as much as any over-the-air network could responsibly risk. Unfortunately, the University presidents and BCS commissioners were not satisfied and they’ve decided to take their jewel events to pay television.”
In a statement, ESPN said: “We are not commenting today about a potential BCS agreement. However, we wish to remind everyone that ESPN is distributed on expanded basic, a product enjoyed by 98 million homes that offers the best entertainment buy in America, including many championship caliber sporting events.”
Conference commissioners and BCS TV negotiator Barry Frank had been meeting in Chicago with the networks, USA Today reported last week.
Fox reportedly pays about $82.5 million annually to air four of the five BCS games — the Sugar, Orange and Fiesta bowls and the BCS National Championship Game. ABC, like ESPN an affiliate of The Walt Disney Co., currently has a separate deal to air the Rose Bowl.
Before Fox’s current deal, ABC held the rights since 1998, when college football’s major conferences implemented the system to crown a national champion.
