Mavericks Owner Mark Cuban on Trial for Alleged Insider Trading

ABC News

View photo

.
abc mark cuban shark tank jrs 120504 wblog Mavericks Owner Mark Cuban on Trial for Alleged Insider Trading

Mavericks Owner Mark Cuban on Trial for Alleged Insider Trading

Known as a savvy businessman on ABC's reality show "Shark Tank," Mark Cuban went on trial Monday in federal court in Dallas on accusations he "committed fraud by engaging in illegal insider-trading," according to court documents.

The complaint, filed by the Security and Exchange Commission, states Cuban agreed to keep non-public information privately exchanged between he and the CEO of a small Internet-search company confidential, but instead used the it to sell his 600,000 shares in the company, avoiding $750,000 in losses. The SEC wants to recoup the money, impose civil fines and enjoin Cuban from similar alleged misconduct.

All of Cuban's interactions with the company, formerly known as Mamma.com Inc., now Copernic Inc., occurred in 2004 when Cuban initially acquired a 6.3 percent stake in it, in March of that year, the documents state.

Three months later upon discovering that a private placement known as a Public Investment in Public Equity (PIPE) offering progressed towards closing, the CEO sent an email titled 'Call me pls,' in which "he asked Cuban to call him 'ASAP' to inform him of the closing." The complaint states that Cuban called the CEO and spoke to him for more than eight minutes to discuss Cuban's stake in the company.

According to the court documents, Cuban became very upset and angry during the conversation, saying he "did not like PIPEs because they dilute the existing shareholders."

"Well, now I'm screwed. I can't sell," Cuban said, according to the SEC.

During the after-hours trading on June 28, 2004 Cuban sold 10,000 of his 600,000 Mamma.com shares. The following morning, he sold his remaining 590,000 shares during regular trading hours.

The documents allege that Mamma.com's executive chairman sent an additional email to the board members the same morning of June 29, 2004 indicating Cuban had acknowledged "he would not invest, does not want the company to make acquisitions and that he will sell his shares which he cannot do until after we announce."

That evening, after the markets had closed, Mamma.com publicly announced the PIPE offering, after Cuban had already sold his shares, the SEC said in the complaint.

Cuban, who is expected to testify, said publically via his attorney on his blog that there was no agreement to keep information confidential.

"The SEC knows their case centers on one telephone conversation between two individuals-four years ago," one of Cuban's attorneys Stephen A. Best said in the statement. "The SEC claims there was an agreement between these parties to the conversation to keep certain information confidential. We interviewed Guy Faure, the former CEO of Mamma.com Inc., with whom the SEC claims Mr. Cuban made an agreement. We had a court reporter transcribe the interview. There was no agreement to keep information confidential."

Cuban's attorneys in Dallas, said they have no further comment on the case, which began jury selection today. The SEC provided the court documents to ABCNews.com but had no further comment on the case as well.

The lawsuit was originally dismissed by U.S. District Judge Sidney Fitzwater who agreed that insider-trading laws did not prohibit Cuban from selling his shares, but the ruling was overturned by an appeals court, which sent the case back to Fitzwater for trial.

Cuban, 55, resides in Dallas and is the owner of the Dallas Mavericks, HDNet, a national high-definition television network, as well as Landmark Theaters.

In March 2013, Sports Illustrated listed Cuban among the 50 most powerful people in sports. His net worth is estimated at $2.5 billion by Forbes.

View Comments (52)

Recommended for You

  • 2 Trains Collide in Germany, 10 Dead, at Least 100 Injured

    Two morning commuter trains have collided in Bad Aibling in southern Germany, raising the death toll to 10 people and injuring more than 100 others, police said.The train manufacturer, Meridian, released a statement in German, saying two trains collided just after 7 a.m. today local time. One…

    Good Morning America12 mins ago
  • Drivers With No Tickets In 3 Years Must Read This

    United States drivers are surprised that they never knew this. If you drive less than 50 mi/day, you better read this...

    Provide-SavingsSponsored
  • Baby Sloth Flies in Private Jet to New Home at National Aviary in Pittsburgh

    A baby sloth was recently flown on a private jet from a breeder in Florida to his new home at the National Aviary in Pittsburgh, Pennsylvania. The 3-month-old Linnaeus sloth "enjoyed the flight very much," National Aviary marketing coordinator Laura Smith told ABC News today. The tiny sloth,…

    Good Morning America18 mins ago
  • Slain Virginia Teen Discussed 'Her Boyfriend' Before Abduction, Friend Says

    A friend of the 13-year-old Virginia girl who was allegedly abducted and murdered last month said the teen had told her about an older "boyfriend" before she went missing. Nicole Lovell, 13, was found dead four days after going missing in late-January and Virginia Tech students David Eisenhauer,…

    Good Morning America30 mins ago
  • 'The Bachelor' Recap: Shocking Eliminations in the Bahamas

    Monday night's episode of "The Bachelor" picked up where last week's episode left off: with Ben Higgins having a private chat with Olivia after he received several complaints about her from the other women. Olivia played the victim, saying she has a target on her back and that her fellow…

    Good Morning America46 mins ago
  • Husband Settles Bed-Hogging Debate With Laser Down the Middle

    If your significant other hogs the bed, this man has a solution: Set up a laser down the middle.Jon Nagel, of Dallas, Texas, posted this hilarious photo to Reddit where it’s now going viral with nearly 1 million views. The caption reads, “In our house there is no debate, ONLY DATA.”He said he…

    Good Morning America53 mins ago
  • Brie Larson Hasn't Seen or Spoken to Her Dad in 10 Years

    Brie Larson is up for an Oscar for her emotionally-wrenching performance of a woman held captive in a garden shed for seven years in the film "Room."Some of the inspiration for her performance, the 26-year-old actress told Elle in a new interview, comes from her own life and difficult childhood.…

    Good Morning America55 mins ago
  • Zika Virus Outbreak Updates: Florida Expands State of Emergency to 7th County

    As the Zika virus outbreak continues, including in wide swaths of Central and South America, concerns are growing, especially for pregnant women, because the mosquito-borne virus has been linked with a serious birth defect called microcephaly, characterized by an abnormally small head and brain. …

    Good Morning America57 mins ago
  • Incredible Footage Shows Pedestrian Tripping Suspect as He's Running From Police

    Officers were on patrol in Kingston, United Kingdom, on Saturday when they were made aware of a report of two males dealing drugs, police said in a statement. The officers chased one of the suspects through the town center "when they received some unexpected assistance from a member of the…

    Good Morning America
  • 'Serial' Convict Adnan Syed's Hearing Wrapping Up

    Lawyers trying to get a new trial for Adnan Syed, the convicted killer at the center of hit podcast “Serial,” and the state attorneys who are hoping to keep him behind bars are making their closing arguments today after resting their respective cases in Syed's bid for a retrial. Syed’s lawyers --…

    Good Morning America
  • Behind the Scenes of ‘Fresh Off the Boat’

    Yang, together with 11-year-old Forrest Wheeler, who plays Emery, and Ian Chen, 9, as Evan, had to get up to speed on the pop culture of the mid-1990s, when the sitcom is set. "I probably had to learn, a lot, too, like, about the rap music, about the culture," Yang said. ABC News’ Chris Connelly…

    Good Morning America
  • Jeb Bush's Fall (or Maybe Rise)

    On the eve of today’s New Hampshire presidential primary, Republican presidential candidate Jeb Bush finished his day at the Frank Jones Center on the seacoast, the same locale where another unlikely GOP contender, John McCain, once hosted his final town hall in a state that he ultimately won eight…

    Good Morning America
  • Officers Give Basketball Hoop to Neighborhood Kids Playing Without Backboard

    Three Ohio police officers gave a big assist Friday night when they gave neighborhood children a new basketball hoop. "This was something that was basically from their hearts," Chief Jim Toles of the Lockland Police Department in Lockland, Ohio, told ABC News. Toles said that Officers Drew Jones,…

    Good Morning America
  • Teresa Giudice Reveals Why She Doesn't Blame Her Husband for Her Prison Term

    In her first live TV interview since being released from prison, Teresa Giudice said she does not blame her husband, Joe Giudice, for the couple’s legal troubles. “No, I don’t,” Giudice, 42, said today on “Good Morning America” when asked if she held Joe responsible. The “Real Housewives of New…

    Good Morning America
  • UCLA Gymnast's Floor Routine Goes Viral With Dab, Nae Nae Moves

    One gymnast is tumbling into Facebook glory with more than 22 million views on her epic hip-hop-themed floor routine.Sophina DeJesus, a senior at UCLA, nailed her floor routine versus Utah with moves that would make even Beyoncé proud. She struts, she dabs and she Nae Naes in her shiny silver and…

    Good Morning America
  • Marco Rubio Believes He Must Be ‘Doing Something Right’

    Sen. Marco Rubio today brushed off recent attacks by his GOP rivals, saying he must be "doing something right," and expressing confidence despite what he called the "unusual set up" in today’s New Hampshire primary. Despite Christie's attacks, Rubio believes he had "a very strong debate," and…

    Good Morning America
  • John Kasich’s New Hampshire Primary Day Prediction: ‘We’re Going to Finish Very Strong’

    Ohio Gov. John Kasich, whose campaign has maintained a laser-like focus on performing well in today’s New Hampshire primary, declined to predict exactly how he would place once all the votes are counted here, but sounded a note of confidence in an interview today on "Good Morning America.""We’re…

    Good Morning America
  • Hong Kong 'Fish Ball Revolution' Erupts in Violent Crackdown

    Violent clashes erupted overnight in Hong Kong after protesters defended unlicensed food vendors, set up for Chinese New Year celebrations, from being shut down by police. The group said on its official Facebook page that its candidate for local council, Edward Leung Tin-kei, had been arrested.

    Good Morning America