Mark Cuban, SEC Set To Start Trial Over Insider Trading



As owner of the Dallas Mavericks, Mark Cuban’s trade activity is always under heavy scrutiny (See Dallas Mavericks Trading for Raef LaFrentz). As a billionaire, Cuban’s trades get examined by a much harder judge, the Securities and Exchange Commission (SEC). Apparently, the SEC has been investigating the Mavericks owner because of a trade he made in 2004. Cuban, 55, is accused of selling his 600,000 shares of the former Inc on June 28 and 29, 2004, soon after learning from Chief Executive Guy Fauré that it was planning an equity offering that could dilute his 6.3 percent stake. The SEC said Cuban avoided a roughly $750,000 loss after the Montreal-based company announced the offering, causing its stock price to drop 9.3 percent on June 30. Cuban, however, maintains that he has done nothing wrong.

The jury trial before U.S. District Judge Sidney Fitzwater in Dallas is expected to last eight to 10 days, which with breaks may stretch into mid-October. Forbes magazine estimates Cuban’s net worth at $2.5 billion, making the $750,000 at issue in this case comparatively minute. The SEC is seeking to recoup ill-gotten gains, impose civil fines and obtain a permanent injunction to bar Cuban from similar alleged misconduct. Fitzwater dismissed the SEC lawsuit in 2009, but a federal appeals court revived the case the following year. Cuban is expected to testify, as is Fauré. Under procedures set by the judge, it is possible that Cuban may testify twice, once during the SEC’s presentation of its case and later when the defense takes its turn.




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