Mark Cuban’s Battle With SEC Heating Up

[duncan228]

Mark Cuban’s battle with SEC heating up
By Danny Robbins

The Dallas Mavericks are out of the NBA playoffs, and the spotlight is now following the team’s controversial owner, Mark Cuban, to a different venue—federal court.

The insider trading suit filed against Cuban by the U.S. Securities and Exchange Commission last year is scheduled to receive its first hearing Tuesday when attorneys present oral arguments on a motion by the billionaire owner to have the case dismissed.

The hearing will provide yet another window to a case that has captured the attention of the country’s legal minds, some of whom believe it represents an unprecedented step by the SEC.

“The basis on which they’re going after Cuban hasn’t been tried before,” said Peter Henning, a law professor at Wayne State University in Detroit who formerly worked as an attorney in the SEC’s enforcement division. “Whether the SEC is going to be able to stretch (its authority) that far certainly remains to be seen.”

The SEC alleges that Cuban engaged in insider trading when he sold his shares in a Canadian Internet search engine company, Mamma.com Inc., after receiving confidential information that the company planned to sell additional shares through a private offering in 2004. Cuban was able to avoid more than $750,000 in losses by selling his shares, according to the SEC.

The government’s case is based on the contention that, by violating an oral agreement to keep the sensitive information confidential, Cuban committed insider trading.

Cuban and his legal team, while not admitting that the facts detailed in the suit are true, say the government’s premise is wrong. They say Cuban, whose shares represented a 6.3 percent stake in Mamma.com, was never an “insider” because he didn’t have a fiduciary or similar duty in his relationship with the company.

Cuban’s motion to have the case dismissed has sparked a series of pleadings and briefs in which he has attacked the government’s position and the government has pushed back with equally sharp elbows.

The SEC argues that a confidential agreement is sufficient to establish a fiduciary relationship and derides Cuban’s attempt to say it isn’t so.

“Cuban’s argument that a person can promise confidentiality and then deliberately and furtively break that promise by trading on the confidential information is shameless,” the SEC stated in a memo opposing his motion to dismiss. “Cuban accepted a duty of trust and confidence to the source of the information and was therefore legally obligated to abstain from trading or first disclose his plan to trade.”

Five respected law professors have filed a brief in support of Cuban’s position. The professors—Alan Bromberg of Southern Methodist University in Dallas, Stephen Bainbridge of UCLA, Allen Ferrell of Harvard, Todd Henderson of the University of Chicago and Jonathan Macey of Yale—weren’t compensated for signing off on the brief, according to the do ent.

In an interview with The Associated Press, Bromberg said he researched the case after being contacted by Cuban’s attorney, Ralph Ferrara, and came to the conclusion that the SEC has gone too far.

“It’s like if somebody from company X called you and mentioned there’s about to be an acquisition at a very attractive price but asked you not to tell anybody,” Bromberg said. “You might say, `Well, sure, I never spill information I get from prospects or contacts,’ or you might say, just as a courtesy, `I’ll keep this information confidential.’ Does that make you an insider? We don’t think so.”

Thomas Lee Hazen, a law professor at the University of North Carolina who has written extensively on securities law, said he believes the SEC is on solid ground.

“What you’ve got is a rule that clearly covers people who are under a duty of confidentiality,” Hazen said. “It would seem to me that a contractual duty could easily be enough (to charge someone with insider trading).”

Cuban did not respond to an e-mail from the AP seeking comment. Ferrara, his attorney, declined comment, saying he did not feel comfortable discussing the issues publicly before they are argued in court.

SEC spokesman John Nester said the agency would have nothing to say beyond its court filings.

No matter where legal experts stand, they agree on one thing: If Cuban doesn’t prevail, Tuesday’s hearing could be the first chapter in a long and contentious case.

“Frankly, the district court is probably just a way station to the Fifth Circuit or even the Supreme Court,” Henning said. “Mark Cuban has some pretty deep pockets.”

[pauls931]

What a bunch of bull !!! Total complete utter ing bull !!! I've been trading/researching stocks for years and this crap is just martha stewart all over again targetting someone in the public eye to pull the wool over the eyes of the general public while the real crooks keep ing US over. 750,000 is jack compared to the real crimes going on with subprime, government handouts, investment banks etc...

if you can't tell, press like this ING PISSES ME OFF!!! Go after the investment banks and Bernie Madoff's of the world for christ's sake!!! Worthless ing SEC@!!!

Completely ing worthless!!! The SEC has no reason to exist in its current form.

just my .02, this kind of it for pulling the wool over the eyes of stupid people.

[angrydude]

What a bunch of bull !!! Total complete utter ing bull !!! I've been trading/researching stocks for years and this crap is just martha stewart all over again targetting someone in the public eye to pull the wool over the eyes of the general public while the real crooks keep ing US over. 750,000 is jack compared to the real crimes going on with subprime, government handouts, investment banks etc...

if you can't tell, press like this ING PISSES ME OFF!!! Go after the investment banks and Bernie Madoff's of the world for christ's sake!!! Worthless ing SEC@!!!

Completely ing worthless!!! The SEC has no reason to exist in its current form.

just my .02, this kind of it for pulling the wool over the eyes of stupid people.

I have to agree.

As interesting a legal question as this is, it is obviously on the fringe of the law, and the law suit is going to cost X many more times as much as the amount in question.

Considering the that's going on all around us I'd have to think the SEC would have far more important things to do with their time.

[TDMVPDPOY]

dude u know sec is a joke ass organization and any fkn regulators out there is a fkn joke,

they always go after the small fries cause they have the resources to do so, but when they chase a big company...they get pwned cause of the amount of money will be spend on courts and .....

[duncan228]

Judge hears Cuban’s motion in SEC case

Dallas Mavericks owner Mark Cuban wants an insider trading lawsuit against him thrown out, but he’ll have to wait for a judge’s decision.

U.S. District Judge Sidney A. Fitzwater heard arguments Tuesday on Cuban’s motion to dismiss the Securities and Exchange Commission suit, but didn’t rule.

Cuban, sporting a black suit rather than his usual T-shirt and jeans, declined to comment afterward. He sat quietly in the front row of the court gallery throughout the proceeding.

The SEC alleges Cuban engaged in insider trading when he sold shares in an Internet search engine company, Mamma.com Inc., after receiving confidential information about a private offering. Cuban’s attorney argued the SEC is not correctly defining insider trading.

[IronMexican]

I thought this was about the South Eastern Conference.

[DPG21920]

Let me guess, Cuban is doing this to take the focus off of Dirk's off court problems.

[monoslyab1k]

I'm never believing in the Mavericks again as long as Cuban is the owner. I'll be pleasantly surprised if they win, but won't be too disappointed if they lose since it would be expected.

Cuban

[spurs_fan_in_exile]

It will go to the Supreme court just after Stern has used his influence to get Obama to appoint Bavetta and Joey Crawford as justices.

[duncan228]

Cuban silent after judge hears arguments
By Danny Robbins

Mark Cuban was uncharacteristically reserved when he appeared in a federal courtroom Tuesday to hear attorneys argue the merits of the Securities and Exchange Commission’s case against him for insider trading.

Sitting in the front row of the gallery with members of his legal team, the Dallas Mavericks owner wore a black suit instead of a T-shirt and jeans, his game-night attire, and his mood rarely changed as he listened intently while attorneys spoke for and against his motion to have the case dismissed.

After the hour-long hearing, which ended without an immediate decision from U.S. District Judge Sidney A. Fitzwater, the normally animated and combative billionaire declined comment.

“Just write about how good I look in my suit,” he said in the hallway outside the courtroom. “I haven’t worn it in 20 years.”

Later, as he prepared to drive away in a black Cadillac Escalade, he told reporters to note that he was “driving American” as well as a hybrid vehicle.

The hearing allowed attorneys to articulate arguments, sometimes in response to questions from Fitzwater, previously stated in motions and briefs since the suit’s filing in November.

The SEC alleges that Cuban was involved in insider trading when he sold shares in an Internet search engine company, Mamma.com Inc., after receiving confidential information about a private offering in 2004. Selling his 600,000 shares, which represented a 6.3-percent stake in the company, allowed Cuban to avoid a loss of $750,000, according to the SEC.

Cuban’s legal team doesn’t acknowledge those facts as true. But even if they are, Cuban’s lawyers contend, he didn’t engage in insider trading because he wasn’t legally an “insider.”

During the hearing, Cuban attorney Ralph Ferrara said Supreme Court decisions make it clear that an “insider” is someone who had a pre-existing fiduciary duty or similar relationship with a company. Because Cuban was simply an investor who allegedly promised confidentiality during a phone call, he isn’t liable, Ferrara argued.

Ferrara accused the SEC of filing a “trimmed down” complaint aimed at defying the Supreme Court’s rulings and extending the agency’s reach.

“This is just the latest attempt by the SEC to remove itself from those bounds,” he said.

SEC attorney Kevin O’Rourke countered by saying the case against Cuban is a “straight down the middle” use of insider trading laws. Breaking a confidential agreement is “the type of deception and fraud securities laws were designed to reach,” he said.

Fitzwater left the bench without comment after hearing the arguments. Attorneys for Cuban said afterward they could not speculate on when the judge might deliver a written opinion.

Cuban filed his motion to dismiss in January and later buttressed his argument with a brief signed by five respected law professors. In its response, the SEC called Cuban “shameless” for attempting to say he could legally trade on confidential information.

[DDS4]

What a bunch of bull !!! Total complete utter ing bull !!! I've been trading/researching stocks for years and this crap is just martha stewart all over again targetting someone in the public eye to pull the wool over the eyes of the general public while the real crooks keep ing US over. 750,000 is jack compared to the real crimes going on with subprime, government handouts, investment banks etc...

if you can't tell, press like this ING PISSES ME OFF!!! Go after the investment banks and Bernie Madoff's of the world for christ's sake!!! Worthless ing SEC@!!!

Completely ing worthless!!! The SEC has no reason to exist in its current form.

just my .02, this kind of it for pulling the wool over the eyes of stupid people.

2nd. It's a misguided witch hunt on Cuban. The SEC should have bigger fish to fry.

The SEC better spend its resources, time, and energy on the Madoffs, Kozlowski's, and Stanford's of the world.

[duncan228]

Mark Cuban sues SEC over insider trading do ents
By Schuyler Dixon

Mark Cuban sued the Securities and Exchange Commission on Thursday for access to do ents detailing the insider trading case against the Dallas Mavericks owner.

The Dallas billionaire filed requests for records in December under the Freedom of Information Act. That was a month after the SEC brought a civil action against Cuban, accusing him of selling shares of Internet search engine company Mamma.com after receiving confidential information about a private offering.

Cuban’s lawsuit, filed in U.S. District Court in Washington, claims the SEC improperly rejected some requests, didn’t respond quickly enough to appeals of rejections and failed to conduct adequate searches for some records.

Cuban provided a copy of his lawsuit to The Associated Press after it was reported by The Dallas Morning News. He didn’t comment further. An SEC spokesman declined comment.

The lawsuit said Cuban sought records of investigations involving Copernic Inc., the name for Mamma.com established two years ago, and an array of current and former Cuban enterprises, including the Mavericks, HDNet and Broadcast.com Inc.

According to the lawsuit, the SEC missed deadlines to respond to appeals of several rejected requests, leaving Cuban no choice but to sue.

“Because the SEC has failed to timely respond to Mr. Cuban’s FOIA/Privacy Act appeals, Mr. Cuban has exhausted his administrative remedies,” the lawsuit said.

The SEC was vague in rejecting many of the requests, the lawsuit said, and sometimes claimed investigations were ongoing when the agency was on record as having completed the probes. The lawsuit also cited President Barack Obama’s executive order from January declaring that federal agencies “should adopt a presumption in favor of disclosure.”

The lawsuit was filed two days after Cuban appeared in federal court for a hearing on his motion to have the case dismissed. The hearing allowed attorneys to articulate arguments previously stated in motions and briefs since the suit’s filing in November. U.S. District Judge Sidney A. Fitzwater didn’t immediately rule on the motion.

The SEC alleges that Cuban avoided a $750,000 loss by selling his 600,000 shares, which represented a 6.3-percent stake in Mamma.com, after executives told him of plans for a private offering. Cuban’s legal team doesn’t acknowledge those facts as true. But even if they are, Cuban’s lawyers contend, he didn’t engage in insider trading because he wasn’t legally an “insider.”

[Basketballgirl25]

I am actually rooting for Cuban to win this case, but maybe he should learn something that was said it one of the articles.

"He sat quietly in the front row of the court" maybe he should do that next season if the mavs lose

[spurscenter]

CUBAN: Don't steal from the government, they hate compe ion.

Stop believing in Democrats or believing in Republicans, Be an American first and foremost and vote accoring to issue, according to politician, not down the ticket.

A select few run the world/U.S. and it's def. not Obama or Bush.