Photo courtesy of the Dallas Morning News
About five years in the making, billionaire Mark Cuban’s day in court over allegations he engaged in insider trading is finally going to happen.
The case dates back to 2008 when the Securities and Exchange Commission (SEC) accused Cuban, who currently owns the Dallas Mavericks basketball team, of acting on confidential information when he sold his stake in Mamma.com, a Canadian search company. According to the SEC, in 2004, Cuban sold off 600,000 shares of the stock, just before Mamma.com announced a private placement of shares.
Jury selection in the trial is expected to commence today, with U.S. District Judge Sidney A. Fitzwater presiding. It’s expected to last eight to 10 days.
At the time he sold his shares, Cuban was the largest stockholder in Mamma.com with 6.3 percent of its shares. In Judge Fitzwater’s pretrial filing, he wrote that in April 2004, Cuban told Mamma.com’s CEO Guy Faure that anything he tells him is confidential. Then, in a June 2004 phone conversation between the two, Faure asked Cuban if he was interested in participating in a new offering that diluted the company’s shares by 8.5 percent. The next day, Cuban’s brokers sold all his shares to avoid a $750,000 loss, the SEC claims. On June 30, 2004, Mamma.com’s stock fell 8.5 percent.
Cuban claims he’s innocent.
“The SEC has alleged that Mark Cuban defrauded Mamma.com Inc. by unlawfully misappropriating confidential information for Mr. Cuban’s personal use in his sale of Mamma securities,” his lawyers said in a court filing. “The record shows that nothing could be further from the truth.”
In addition to owning the Mavericks, Cuban also is currently the chairman of HDNet, a high-definition television network.
Read more about this story on Bloomberg.
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