SEC Files Insider Trading Charges Against Mark Cuban

November 17th, 2008 at 12:00 am
 


securities and exchange commission

The Securities and Exchange Commission has finally officially filed a case against dot com billionaire Mark Cuban on Insider Trading charges. The incident for which Cuban is being charged happened in 2004 with the stocks of search engine Mamma.com.

Allegedly, Mamma.com Inc. invited Cuban to participate in the stock offering after he agreed to keep the information confidential. However, after the meeting, Cuban used the information he learned and sold all his shares in the company to avoid losses of at least $750,000.

Scott W. Friestad, Deputy Director of the SEC’s Division of Enforcement, said, "As we allege in the complaint, Mamma.com entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential. 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."

The complaint alleges that Cuban violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission’s complaint seeks to permanently enjoin Cuban from future violations of the federal securities laws, disgorgement (with prejudgment interest), and a financial penalty.