Internet Billionaire Mark Cuban Charged With Insider Trading
By Anna Johnson on November 18th, 2008The United States Securities and Exchange Commission (SEC) has charged billionaire web entrepreneur (and Dallas Mavericks owner) Mark Cuban with insider trading.
Mark Cuban, who co-founded Broadcast.com, a leading provider of multimedia and streaming on the Internet which was later sold to Yahoo, is accused of using inside information back in June 2004 to dump his 6.3 percent stake in meta search engine Mamma.com. Cuban sold his stock just hours before the company announced a round of fund raising that caused the value of stock in the company to plummet.
Evidently, the CEO of Mamma.com called Mr Cuban on June 28, 2004 to let him know about the capital raising. Cuban was, according to the SEC, unhappy with the plan and subsequently sold his stock before the new fund raising was announced to the public. The SEC alleges that by selling when he did, Mark Cuban avoided losses in excess of $750,000.
For his part, Mark Cuban says the SEC’s case has no merit and is “a product of gross abuse of prosecutorial discretion.” He plans to contest the allegations and demonstrate that the SEC’s claims are “infected by the misconduct of the staff of its Enforcement Division.”
Said Mr Cuban in response to the charges:
“I am disappointed that the Commission chose to bring this case based upon its Enforcement staff’s win-at-any-cost ambitions. The staff’s process was result-oriented, facts be damned. The government’s claims are false and they will be proven to be so.”
Sources: Marshall Kirkpatrick, “Mark Cuban Charged With Insider Trading of Search Engine Mamma.com”, ReadWriteWeb, November 17, 2008, Mark Cuban, “The SEC”, Blog Maverick, November 17, 2008
