Yesterday a jury in Texas cleared Mark Cuban of any alleged
illegal insider trading. The Dallas Mavericks' owner has been in an
ongoing battle with the SEC for the past five years over civil
charges accusing him of making illegal insider transactions in a
small Internet search company nearly a decade ago.
The crime Cuban was accused of was selling his 600,000 shares of
mamma.com stock on June 28, 2004. He allegedly sold these shares
immediately upon hearing from CEO Guy Faure that the company was
planning an equity offering that would significantly dilute his
6.3% stake in the company.
The multibillionaire was charged as
insider trading because he was given information that had not been
awarded to the general public.
The Securities and Exchange Commission (SEC) reported that Cuban
avoided an estimated loss of $750,000 after the Canadian-based
company announced their equity offering which caused the company's
price to drop 9.3% on Jun 30, 2004.
The always vocal Mark Cuban has argued that he did nothing wrong,
and that all the information he was given was not secret or
confidential information. And with Forbes valuing Cuban at $2.5
billion, $750,000 seems like a rather minor amount of money.
The NY Times reports that the Securities and Exchange Commission
was hoping to "build on the momentum it gained from the recent
trial win against Fabrice Tourre, a former Goldman Sachs trader."
With the loss of this battle, there is concern with the
organization's capability of winning crucial cases. This loss might
also undermine the SEC's new campaign to hold more individuals
accountable at trial.
The SEC's spokesman, John Nester, stated in a press release, "We
respect the jury's statement. While the verdict in this particular
case is not the one we sought, it will not deter us from bringing
and trying cases where we believe defendants have violated the
federal securities laws."
The case against Cuban doesn't seem to have been a difficult one as
the nine-person jury decided in less than four hours that Cuban was
not liable under the federal securities laws to have committed
Cuban was facing an approximate $2 million fine, but was not
concerned so much about the money, but more so about clearing his
name and shutting up the SEC.
After he received the "not guilty" verdict Cuban said in a news
conference, "I hope this result shines a light on the SEC abuses
that I have witnessed... and causes the agency to change the way
they do business."
About GuruFocus: GuruFocus.com tracks the stocks picks and
portfolio holdings of the world's best investors. This value
investing site offers stock screeners and valuation tools. And
publishes daily articles tracking the latest moves of the world's
best investors. GuruFocus also provides promising stock ideas in 3
monthly newsletters sent to