Mark Cuban charged with insider trading

SEC charges Dallas Mavericks owner with insider trading related to sales of

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By David Goldman, staff writer

Dallas Mavericks owner Mark Cuban is accused of insider trading.
Which should be the Obama administration's priority?
  • Stimulating the economy
  • Reducing the budget deficit

NEW YORK ( -- Billionaire entrepreneur Mark Cuban, owner of the National Basketball Association's Dallas Mavericks, was charged Monday by the Securities and Exchange Commission with insider trading.

The civil suit was filed by the SEC in a federal court in Dallas.

According to the SEC, Cuban sold 600,000 shares of Internet search company in June 2004 using non-public information.

Cuban is accused of calling his broker and instructing him to sell all of his stock from after receiving the confidential information from the company.

The SEC said Cuban learned that the company would raise money through a public offering, and he knew the stock price was about to fall.

When the offering was made public, the stock fell 9.3%, and Cuban avoided losses in excess of $750,000 by selling stock the day before, the SEC report said.

"I am disappointed that the Commission chose to bring this case based upon its Enforcement staff's win-at-any-cost ambitions," said Cuban in a statement released by his legal counsel, Dewey & LeBoeuf. "The staff's process was result-oriented, facts be damned. The government's claims are false and they will be proven to be so."

An SEC official said Cuban was given the public offering information from in confidence, and Cuban made illegal use of that knowledge.

"As we allege in the complaint, entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential," Scott W. Friestad, Deputy Director of the SEC's Division of Enforcement, said in the report. "Less than four hours later, Mr. Cuban betrayed that trust by placing an order to sell all of his shares." has since changed its name to Copernic Technologies (CNIC), and now produces Internet search-advertising services in addition to search software. Copernic's stock currently trades for less than $1 per share.

According to Phillip Stern, a former SEC attorney and current lawyer at Neal, Gerber & Eisenberg, Cuban will likely face a fine of twice the losses he would have incurred, or about $1.5 million. The SEC's lawsuit is a civil case, and Cuban does not face any criminal charges.

Stern does not believe Cuban will have to divest his ownership stake in his other companies, including cable network HDNet.

In an ironic twist, Cuban is also the majority owner of, an investigative blog designed to sniff out and expose securities fraud, according to site editor Christopher Carey.

Cuban has been identified as one of the bidders for Major League Baseball's Chicago Cubs for about a year, after the team was put up for sale by owner Sam Zell, chief executive of the Tribune Co. But baseball sources told the Chicago-Sun Times last week that Cuban is unlikely to get the league's blessing despite his deep pockets.

"These allegations really say something about his integrity," said Stern. "Baseball was already concerned about him, and now it will be difficult to persuade them otherwise." To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
17 cool gadgets that tease the future Smart telescopes, surveillance for dogs, an electric roadster and more from CES 2018. More
These 12 airplane beds let you really sleep on a flight For the price of a premium class ticket, you may just get a space that's comfortable, private, and quiet enough to ensure a good rest. More
CES 2018 kicks off with oddball gadgets The biggest tech show of the year opened with a collection of quirky gadgets. More