Mark Cuban, the multibillionaire owner of the Dallas Mavericks, is dealing with something that his entrepreneurial skills may not be able to help him with.
According to court documents, the businessman is on trial of accusations he “committed fraud by engaging in illegal insider-trading.”
After nearly a decade long federal insider trading investigation, the Securities and Exchange Commission (SEC) filed a complaint that Cuban was given confidential information from the CEO of Mamma.com Inc., now known as Copernic Inc., that the company was looking to close after a Public Investment in Public Equity (PIPE) offer. Cuban then took that information to sell his 600,000 shares in the company to avoid a loss of $750,000. He first sold 10,000 during after hours on June 28, 2004, and sold the rest the next morning, June 29, 2004, during regular hours. All of this was done before the company went public with the same information.
The case was first brought in front of U.S. District Judge Sidney Fitzwater in 2009, who dismissed the case because he agreed that Cuban didn’t break any insider-trading laws by selling his shares. Fitzwater’s ruling was overturned by an appeals court in 2010 and sent back to him for trial.
Cuban denies any information he was given was confidential or would break any insider trading laws. When the lawsuit was first filed in 2008, Stephen A. Best, one of Cuban’s attorneys, said in a statement released on Cuban’s blog, “The SEC knows their case centers on one telephone conversation between two individuals- 4 years ago. 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.”
If Cuban is proved guilty, the SEC wants to charge Cuban with civil fines, recoup the money, and “enjoin Cuban from similar alleged misconduct.”
Jury selection for the trial began Monday and found potential jurors being asked if they are fans of the Mavericks, or if they watched Cuban on Shark Tank or Dancing With The Stars.
Prospective jurors in the Mark Cuban insider trading trial asked if they are Mavericks and Shark Tank fans. #markcuban #insider trading
— ann zimmerman (@annzwsj) September 30, 2013
A juror in the Mark Cuban trial is asked what she remembered about his appearance on Dancing w/ Stars."He danced with his mouth open"
— ann zimmerman (@annzwsj) September 30, 2013
Mark Cuban laughed when I told him the Tyson Chandler trade is what he should really be on trial for. #Dallas Mavericks
— ann zimmerman (@annzwsj) September 30, 2013
Jury now chosen for SEC's insider trading trial against @mcuban. Opening statements tomorrow, regardless of gov shutdown.
— David Schechter (@DavidSchechter) September 30, 2013
According to Fitzwater, the impending government shutdown will not affect the trial, at least not for two weeks. During proceedings he will see how to go forward with the trial if it is to continue past the two week mark.