WASHINGTON -- Federal regulators have accused billionaire Dallas Mavericks owner Mark Cuban of insider trading for allegedly using confidential information on a stock sale to avoid more than $750,000 in losses.
The Securities and Exchange Commission filed a civil lawsuit against Cuban on Monday in federal court in Dallas. The agency said that in June 2004, Cuban was invited to get in on the coming stock offering by Mamma.com Inc. after he agreed to keep the information private.
The SEC said Cuban knew the 600,000 shares of stock would be sold below the current market price, and a few hours after receiving the information, told his broker to sell all shares in the search engine company.
The commission is seeking to impose financial penalties and confiscate gains from the trades.
"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," Scott W. Friestad, deputy director of the SEC's Division of Enforcement, said in a statement. "It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market."
According to the SEC, the complaint seeks to permanently enjoin Cuban from future violations of the federal securities laws, disgorgement (with prejudgment interest), and a financial penalty.
"Insider trading cases are a high priority for the Commission," Linda Chatman Thomsen, director of the SEC's Division of Enforcement, said in the statement. "This case demonstrates yet again that the Commission will aggressively pursue illegal insider trading whenever it occurs."
Cuban's situation is drawing comparisons to Martha Stewart's involvement in insider trading in 2001, although Stewart's case turned to the criminal courts when she was charged with lying to federal investigators. Stewart was convicted in March 2004 on charges of conspiracy, obstruction of justice, and two counts of making false statements and was sentenced to prison.
Mamma.com, a Canadian company, merged with Copernic Technologies in December 2005. Copernic also offers search software and online advertising services. Mamma.com now trades under Copernic's ticker, CNIC.
To read the full complaint, click here.
Information from The Associated Press was used in this report.
http://sports.espn.go.com/nba/news/story?id=3708124
The Securities and Exchange Commission filed a civil lawsuit against Cuban on Monday in federal court in Dallas. The agency said that in June 2004, Cuban was invited to get in on the coming stock offering by Mamma.com Inc. after he agreed to keep the information private.
The SEC said Cuban knew the 600,000 shares of stock would be sold below the current market price, and a few hours after receiving the information, told his broker to sell all shares in the search engine company.
The commission is seeking to impose financial penalties and confiscate gains from the trades.
"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," Scott W. Friestad, deputy director of the SEC's Division of Enforcement, said in a statement. "It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market."
According to the SEC, the complaint seeks to permanently enjoin Cuban from future violations of the federal securities laws, disgorgement (with prejudgment interest), and a financial penalty.
"Insider trading cases are a high priority for the Commission," Linda Chatman Thomsen, director of the SEC's Division of Enforcement, said in the statement. "This case demonstrates yet again that the Commission will aggressively pursue illegal insider trading whenever it occurs."
Cuban's situation is drawing comparisons to Martha Stewart's involvement in insider trading in 2001, although Stewart's case turned to the criminal courts when she was charged with lying to federal investigators. Stewart was convicted in March 2004 on charges of conspiracy, obstruction of justice, and two counts of making false statements and was sentenced to prison.
Mamma.com, a Canadian company, merged with Copernic Technologies in December 2005. Copernic also offers search software and online advertising services. Mamma.com now trades under Copernic's ticker, CNIC.
To read the full complaint, click here.
Information from The Associated Press was used in this report.
http://sports.espn.go.com/nba/news/story?id=3708124
