David Kirkpatrick

November 17, 2008

SEC ropes a maverick

I think the SEC has much bigger fish to fry than busting Mark Cuban for adding a portion of one percent to his fortune, but I guess those little regulators need a diversion right now to compensate for the ongoing failure of epic proportions that is the Fed, the Treasury, and the rest of the alphabet soup of financial regulatory bodies.

I’m going to go out on a limb to suggest this action totally squashes Cuban’s tiny hope for owning the Chicago Cubs. MLB is that dumb.

From the link:

The Securities and Exchange Commission said Monday that it had charged Mark Cuban, the billionaire Internet entrepreneur and owner of the Dallas Mavericks basketball team, with insider trading for selling 600,000 shares of an Internet search engine company.

The S.E.C. said Mr. Cuban sold the stock in the company, Mamma.com, based on nonpublic information about an impending stock offering. The commission asserted that Mr. Cuban avoided losses in excess of $750,000 by selling his stock prior to the public announcement of the offering.

The commission filed a civil lawsuit against Mr. Cuban in Federal District Court for the Northern District of Texas, accusing him of violating federal securities laws. It said it was seeking to impose financial penalties and confiscate gains from the trades.

In its complaint, the S.E.C. asserted that Mamma.com invited Mr. Cuban to participate in the stock offering in June 2004 after he agreed to keep the information confidential. The S.E.C.’s complaint asserted that Mr. Cuban knew that the offering would be conducted at a discount to the prevailing market price and that it would be dilutive to existing shareholders.