Monday Nov. 17, 2008
WASHINGTON (AP) -- Federal regulators charged Dallas Mavericks owner Mark Cuban with 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 alleged 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. (Read the complete SEC complaint here, via the The Wall Street Journal.)
The SEC said Cuban knew the shares would be sold below the current market price, and a few hours after receiving the information, told his broker to sell his entire stake of 600,000 shares in the search engine company before the public announcement of the offering.
By selling when he did, Cuban avoided losses exceeding $750,000, according to the SEC. At the time of the offering, Cuban was the largest known shareholder in the Montreal-based company, which later changed its name to Copernic Inc.
The SEC is seeking a court judgment against Cuban finding that he violated the antifraud provisions of the federal securities laws, an injunction against future violations, an unspecified civil penalty and restitution of the losses Cuban allegedly avoided.
Unless he is subject to an injunction, Cuban "is likely to commit such violations again in the future," according to the SEC suit.
Attorneys for Cuban in Washington and Dallas didn't immediately return telephone calls seeking comment.
The 50-year-old Cuban also owns Landmark Theaters, a large national chain dedicated to independent films, and the HDNet cable television channel.
He is one of the richest people in the world, according to Forbes magazine, which pegged his net worth at $2.3 billion as of March 2007.