Mark Cuban accused of insider trading
TEXT OF STORY
Kai Ryssdal:
Billionaire Mark Cuban is known for not much caring what the rules are.
Just ask his fellow owners in the National Basketball Association, where the owner of the Dallas Mavericks has racked up millions of dollars in fines.
Today the Securities and Exchange Commission charged Cuban with insider trading.
The SEC says Cuban illegally used non-public information about a company he owned a big chunk of to avoid more than $750,000 in losses.
Our Washington Bureau Chief John Dimsdale has the details.
John Dimsdale:
In 2004, a Canadian Internet search engine asked its biggest shareholder, Mark Cuban, if he’d invest in a private stock offering. Not only did Cuban not want to buy the stock, he realized that if others did that would dilute the value of his existing shares. The SEC says that’s why he immediately sold all 600,000 shares. When Mamma.com announced its stock offering, the share price dropped and Cuban side-stepped a $750,000 loss.
Former SEC prosecutor Jacob Frenkel says the commission believes Mark Cuban will have a tough time claiming he didn’t know he shouldn’t act on the confidential offer.
Jacob Frenkel: Someone of Mr. Cuban’s trading acumen will understand the significance of such a transaction to the market and to the effect that such a transaction will have on a stock’s trading price.
The SEC is asking for civil penalties and the return of losses Cuban allegedly avoided by selling his shares.
In Washington, I’m John Dimsdale for Marketplace.
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