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Mark Cuban Wins in Insider-Trading Case Jury Rejects SEC's Charges Related to Sale of Internet...

post #1 of 10
Thread Starter 

John Carreyrou
Oct. 16, 2013 4:00 p.m. ET

DALLAS—A federal jury ruled in favor of Mark Cuban after just over three hours of deliberations, handing the billionaire a resounding victory in his five-year quest to defend himself against the government's charges of insider trading.

excerpt: The Securities and Exchange Commission had sued Mr. Cuban in civil court, alleging that he traded on material, nonpublic information when he dumped his investment in Canadian Internet search company Mamma.com DPSI -3.17% in June 2004 before it announced a private offering of shares that caused its stock to drop.

At the crux of the case was an eight-minute phone conversation Mr. Cuban had with Guy Fauré, the former chief executive of Mamma.com, on June 28, 2004. The SEC alleged that Mr. Cuban agreed to keep the information Mr. Faure gave him about the private share offering confidential and not to trade on it. Mr. Cuban steadfastly denied doing so....end of excerpt
post #2 of 10
When I first heard of this a few years ago I thought for sure he would be convicted. Not that I knew much about his case just that after the Bernie M conviction I figured he'd go down also.
post #3 of 10
Thread Starter 

they really are completely different in most every respect

Mark used to post on AVS and is a big technology buff: he started HDNET and was rumored to have been connected with VOOM
post #4 of 10
Yes, very different. This was a civil case only. If he had been found to have executed these trades using inside information he would have had to pay a fine based in part on the money he made by selling before the stock dropped. Interestingly enough he has acknowledged spending more on his defense then the fine would have cost him as it was a matter of principle for him. And he won an overwhelming victory against the SEC in this case. Too bad they don't have to cover his legal expenses as a result.
post #5 of 10
It was a civil case? I thought the govt brought charges against him?

I read the Reuters article from a day ago just now and yes it was a civil suit. He was obviously innocent because the jury said so, and I'm glad to see the govt didn't bully him. IMO they are too much in our business to begin with.
Edited by comfynumb - 10/18/13 at 11:34am
post #6 of 10
Honestly, i have no trouble believing Cuban happened to sell at just the right moment. That's how he's made all his real money over the years.

He sold Broadcast.com at just the right time to get the most money and stock from Yahoo! - then sold the Yahoo! stock at it's peak before it all went to hell for them.

If HDNet weren't a pet project for him, he'd likely find the right moment to sell it off for the most profit, too.
post #7 of 10
Thread Starter 
excerpts of an article from todays WSJ http://online.wsj.com/news/articles/SB10001424052702304410204579141760526200476?mod=WSJ_hps_sections_yourmoney

Mark Cuban Calls a Foul on the SEC

Wall Street Regulators Tried to Shake Down the Wrong Celebrity Billionaire.
Al Lewis

Dallas Mavericks owner Mark Cuban has berated referees, insulted fans, screamed at players, and once even told Kenyon Martin's mother that her son was a thug.

The Securities and Exchange Commission must have figured him for an easy mark.

When the regulator sued Mr. Cuban for insider trading in 2008, it likely figured he would pay his fine.

The SEC could then score a high-profile headline. And Mr. Cuban, who would not have had to admit guilt, could move on. That is, after all, how these cases usually went.

"Mark Cuban didn't follow that playbook," says Andrew Stoltmann, a Chicago securities attorney and adjunct law professor at Northwestern University. "Instead, he thought he could put the SEC through the wringer, and that's exactly what he did."

Mr. Cuban—an Internet entrepreneur, a celebrity billionaire that average Americans watch on the reality TV series "Shark Tank" and a showman who once competed on "Dancing with the Stars"—spent more money in legal fees fighting the charges than it would have cost to settle them.

"I'm glad I'm able to be the person who can afford to stand up to" the SEC, he said.

The case hinged on a witness who did not even appear in court. SEC lawyers offered recorded testimony from Guy Fauré, former chief executive of Internet search firm Mamma.com. DPSI 0.00%

The SEC alleged that Mr. Fauré gave Mr. Cuban information that Mr. Cuban agreed to keep confidential. Instead, Mr. Cuban dumped his shares in Mamma.com after hearing it.

Unfortunately, Mr. Fauré lives in Canada, where Mamma.com was based. The SEC couldn't force him onto the witness stand. It built its entire case on this one "Guy" who didn't show.

Mr. Cuban was merely accused of trying to avoid a loss—not repeatedly gaming the market. And evidence presented during the trial suggested that the information he acquired may have been publicly available, anyway.

—Al Lewis is a columnist based in Denver. He blogs at tellittoal.com; his email address is al.lewis@tellittoal.com
post #8 of 10
What a total waste of tax payer money, and I hope the new chairwoman follows through with the reform she promised.
post #9 of 10
^Don't count on it.
post #10 of 10
Thread Starter 
I have to agree with Vinnie on this...
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