Cuban Indicted Sued By S.E.C.
WSJ: SEC charges Dallas Mavericks owner and Internet entrepreneur Mark Cuban with insider trading related to sales of Mamma.com, now known as Copernic.
The Securities and Exchange Commission filed insider trading charges against Mark Cuban, the outspoken owner of the Dallas Mavericks, for allegedly dumping shares in Mamma.com upon learning it was raising money in a private offering.
The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.
In a PIPE transaction new shares are issued at a discount to the current trading price. An announcement of a PIPE transaction is often followed by a drop in the stock price as shareholders anticipate their stake will be diluted.
I always like Cuban . . . Got out at the top, dumping his Yahoo shares. This is an incidental amount of money to him, and I am surprised that he — as an insider — would do something this Martha-like. Seems foolish, but let’s see if there is any sort of an explanation.
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Sources:
Video
Mavericks’ Cuban Sued by SEC for 2004 Insider Trading
David Scheer
Bloomberg, Nov. 17 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKfv8UKVEc_4&
November 17th, 2008 at 11:35 am
Poor Mark, he probably pissed off one too many people.
November 17th, 2008 at 11:38 am
Couldn’t have happened to a nicer guy…
November 17th, 2008 at 11:43 am
Greed blow back
November 17th, 2008 at 11:49 am
Protect yourself from insider trading in two easy steps:
1) Assume someone has more information than you, and will be acting on it in their perceived self-interest.
2) Invest no more than you are comfortably prepared to lose considering Step 1.
Or, just cede your personal responsibility to bungling bureaucrats and the Fickle Finger of Fate and get what you have coming.
November 17th, 2008 at 12:14 pm
An indictment is not a conviction. He’ll get the best defense that money can buy. I wouldn’t bet against him at this point.
November 17th, 2008 at 12:37 pm
A story on the CNBC website states that Cuban has only been ACCUSED (by the SEC) of insider trading, and there is no mention of an indictment.
No prison time for Cuban.
November 17th, 2008 at 12:40 pm
I love that with all the bullshit conflicts of interest and malfeasance that has gone on on wall street the last 8 years that the SEC has nothing better to do than investigate this guy for supposedly saving himself $750,000 four years ago. Maybe it has something to do with his suggesting that the rich should shoulder a larger share of the tax burden? Sounds like using the powers of the FBI to bust Spitzer getting laid, which by the way never resulted in charges because he stepped down without putting up a fight. What if he had done what Ted Stevens or Larry Craig had done and stayed in office any way? Got off track, but to me it seems like VERY selective prosecution.
November 17th, 2008 at 12:41 pm
So instead of going after the CEO’s and CFO’s that signed off on all those Sarbane-Oxley financials the last 4 years and putting their asses in the can, they are going after Mark Cuban?? On a four year old questionable transaction worth $750,000? vs the billions the bozzo’s have cost the market, economy, 401ks…..
November 17th, 2008 at 12:52 pm
I’m looking forward to the market summaries today that will of course begin with “Markets rallied on news that Mark Cuban faces insider trading charges….”
November 17th, 2008 at 12:53 pm
Someone at the SEC must be a Cub fan.
November 17th, 2008 at 12:56 pm
Barry wrote:
“This is an incidental amount of money to him, and I am surprised that he — as an insider — would do something this Martha-like. Seems foolish, but let’s see if there is any sort of an explanation.”
We have seen this dynamic many times now. I’m no longer surprised. It seems to me that some people become convinced (by prior success? by position? by?) that they shouldn’t have to face the restrictions placed on the masses, that, if they can arrange a positive outcome, they “deserve” it without regard for laws or other restrictions the rest of us face. Leona Helmsley and taxes. Bill and Monica. Countless corporate insiders and the many ways in which they can cheat customers, employees, shareholders, and creditors.
November 17th, 2008 at 12:58 pm
Having been through this personally…there is no rhyme or reason to it…if civil charges have actually been filed, cuban has been aware of the issue for probably a year. He’s been interviewed, probably deposed and has already hired a skilled securities attorney to assist him. We should also not jump to conclusions as there are many pieces of the puzzle still unknown.
November 17th, 2008 at 1:00 pm
Cuban is behind a website called BailoutSleuth (http://www.bailoutsleuth.com) that exposes the absurdity of these bailouts. Some very good detailed inside information that isn’t making it’s way out through main media. A bit of payback time???
November 17th, 2008 at 1:00 pm
Institutional sized options trade on GLW Dec $12.50 calls.
549 lots on Dec $12.50 calls at $20 each.
Total of almost $11K
For 549,000K shares of GLW.
November 17th, 2008 at 1:19 pm
Sportscenter says jail time impossible with current charges, and doubtful new ones would be filed. Although, everyone thinks of Martha Stewart here, she went to jail the coverup, charged with conspiracy, obstruction of an agency proceeding, and making false statements to federal investigators.
November 17th, 2008 at 1:21 pm
Since I love a good conspiracy, anyone think this is SEC/Treasury way of telling Cuban to back off on his muckraking about the bailouts?
http://blogmaverick.com/2008/10/17/announcing-bailoutsleuthcom/
http://bailoutsleuth.com/
November 17th, 2008 at 1:46 pm
With the $2T in opaque bailouts, borrowings, and bazookas among battered banks, it is good to see the SEC is doing something meaningful and constructive with their time – between this hardcore investigation by the SEC and Congress assuring us last summer that Major League Baseball will be steroid free, it hard not to swell with pride about our American institutions and way of life.
God bless us everyone.
November 17th, 2008 at 2:06 pm
BrianMcC & others:
Don’t forget who Cuban employs now. Dan Rather. Did anyone see the NY Times front page today(Or was it yesterday)?
November 17th, 2008 at 2:28 pm
Cuban just posted a reply at his blog:
” 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. 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.
Mr. Cuban stated, “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.”
November 17th, 2008 at 4:45 pm
@jmborchers – That’s not necessarily an “institutional sized trade”. Not sure what you infer from it, but I’d say a disappointed bull is collecting a few cents now rather than wait for options heaven, the likely destination of those calls.
November 17th, 2008 at 6:19 pm
Archiphage:
Considering all the inept and/or greedy politicians, CFOs, CEOs, rating agencies, hedge funds and insider traders in the world, what’s the point of investing in the stock market at all? It’s too much of a headache.
November 17th, 2008 at 7:42 pm
I guess I am the only one who’s chuckling manically, in a mixture of outrage, chagrin and dread that it took the SEC FOUR FUCKIN’ YEARS to react.
The only thing more embarrassing that I can imagine, is them not being able to make it stick. And let’s face it, that is very, very likely.
I guess the good news is they’ll start working on the subprime meltdown in 2011. We are so screwed.
November 17th, 2008 at 8:22 pm
Cuban was not indicted.
This is a civil complaint, not a criminal one. When someone is indicted, it means a grand jury has considered the evidence and decide it warrants bringing a criminal case. That did not happen here, just the staff of the SEC decided to bring this lawsuit.
See for more: http://www.findingdulcinea.com/news/business/2008/November/Mark-Cuban-Charged-with-Insider-Trading-.html
November 18th, 2008 at 5:07 pm
Dustin Anderson comments on the SEC’s insider trading charges against Mark Cuban:
It’s interesting to note that just back in mid October Mr. Cuban announced his involvement with BailoutSleuth, which is a new blog that sets out to “keep an eye on our taxpayer dollars and call Bullshit when necessary”. The project has been keeping up on where the bailout money is going (at least the money that’s been transparent) and has been critical every step of the way.
However, I’m convinced Mr. Cuban’s open criticisms of government have got nothing to do with these charges that are based on a trade that took place four years ago. Why, that would be preposterous!
Hmm.
http://disinter.wordpress.com/2008/11/18/mark-cuban-targeted-by-sec-after-exposing-corruption/