SEC Loses Insider Trading Suit against Mark Cuban

The Securities and Exchange Commission threw up an air ball in its shot to hold Dallas Mavericks owner Mark Cuban liable on insider trading charges.  After a two week civil trial in Dallas, the nine person jury, after a mere four hours of deliberation, found against the SEC in its civil suit alleging that Cuban dumped stock of an Internet company after receiving nonpublic insider information.

The suit alleged that in a 2004 telephone conversation with Mamma.com chief executive officer, Guy Foure, Cuban learned that the company was planning a private stock sale, which would dilute the price of the outstanding shares.  The SEC alleged that Foure had warned Cuban that he was about to reveal nonpublic information before telling the investor about the private sale.  The suit alleged that Cuban avoided about $750,000 in losses through the sale.

The billionaire Cuban faced approximately $2 million in penalties.  He fought the case to protect his reputation and humble the SEC.  The SEC's star witness was Foure who testified via videotape.  Foure recounted that conversation that Cuban testified he did not recall.  The telephone call was not recorded, and there was nothing else to corroborate Foure's testimony.  While Foure declined to testify in person, Cuban spent two days on the witness stand and apparently handled the questioning adroitly.  It appears that in a he said - he said situation the jury credited Cuban's testimony and not that of Foure.

For a full article on the case, please see The New York Times, http://dealbook.nytimes.com/2013/10/16/mark-cuban-cleared-of-insider-trading/?ref=business.

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