Mark Cuban, billionaire entrepreneur and owner of the National Basketball Association (NBA) Dallas Mavericks, was charged on Monday with insider trading by the U.S. Securities and Exchange Commission (SEC) on sales of Mamma.com shares when he was part-owner of the Internet search engine company.
In a civil lawsuit filed in the U.S. District Court in northern Texas, the SEC charged Cuban with selling 600,000 shares of Mamma.com based on insider information obtained prior to a stock offering in 2004.
Upon discovering that the offering was priced under the current trading price at the time—and below Cuban’s original purchase price—he instructed his broker to sell the entire 6 percent stake in the company.
The stock trade saved Cuban more than $750,000 in losses, prosecutors said.
“Mamma.com entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential,” said Scott W. Friestad, Deputy Director of the SEC’s Division of Enforcement in an SEC statement. “Less than four hours later, Mr. Cuban betrayed that trust by placing an order to sell all of his shares.”
“It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market.”
On his Internet blog blogmaverick.com, Cuban denied the charges and said that he was “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 [were disregarded],” Cuban asserted. “The government’s claims are false and they will be proven to be so.”
According to court documents, Guy Faure, the former CEO of Mamma.com spoke to Cuban on the phone the day prior to the stock offering. Cuban subsequently told his broker to “sell what you can tonight and just get me out the next day,” the court documents read.
Mamma.com shares opened down 9 percent the following day, on June 30, 2004 and proceeded to steadily decline the rest of the week.
Mamma.com is currently owned by Montreal-based Copernic, Inc.
In a civil lawsuit filed in the U.S. District Court in northern Texas, the SEC charged Cuban with selling 600,000 shares of Mamma.com based on insider information obtained prior to a stock offering in 2004.
Upon discovering that the offering was priced under the current trading price at the time—and below Cuban’s original purchase price—he instructed his broker to sell the entire 6 percent stake in the company.
The stock trade saved Cuban more than $750,000 in losses, prosecutors said.
“Mamma.com entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential,” said Scott W. Friestad, Deputy Director of the SEC’s Division of Enforcement in an SEC statement. “Less than four hours later, Mr. Cuban betrayed that trust by placing an order to sell all of his shares.”
“It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market.”
On his Internet blog blogmaverick.com, Cuban denied the charges and said that he was “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 [were disregarded],” Cuban asserted. “The government’s claims are false and they will be proven to be so.”
According to court documents, Guy Faure, the former CEO of Mamma.com spoke to Cuban on the phone the day prior to the stock offering. Cuban subsequently told his broker to “sell what you can tonight and just get me out the next day,” the court documents read.
Mamma.com shares opened down 9 percent the following day, on June 30, 2004 and proceeded to steadily decline the rest of the week.
Mamma.com is currently owned by Montreal-based Copernic, Inc.
Friends Read Free