Mark Cuban charged with insider trading

Dallas Mavericks owner and businessman Mark Cuban was charged with insider trading by the U.S. Securities and Exchange Commission (SEC). Cuban is accused of using insider information to save $750,000 in losses.

Mark Cuban is a controversial figure who speaks his mind about referees, the NBA and Internet industries like Yahoo, YouTube etc. Now, he is becoming the main controversy after being charged with insider trading by the SEC. The billionaire from Texas was charged with selling 600,000 shares of Mamma.com., Inc, a search engine company, after allegedly getting inside information from the company about an impending stock offering to the public. The SEC complaint filed in the U.S. District Court for northern Texas alleges that in June of 2004, Mamma.com told Cuban to participate in the stock offering after he agreed to keep the information confidential. But Cuban didn’t participate in it, and instead decided to sell the shares. The stock was at 13.10 per share at the beginning of the day and after Cuban heard the news, he allegedly knew the stock price would devalue with more shares issued to the market. So, he allegedly asked his broker to sell his stock within hours of hearing the information from Mamma.com. The stock declined in value at the end of the day to $11.89, down 3.9 per cent thus saving Cuban $750,000 in total value. The SEC enforcement division director Linda Chatman Thomsen told Reuters:

"Insider trading cases are a high priority for the Commission...This case demonstrates yet again that the Commission will aggressively pursue illegal insider trading whenever it occurs."

The SEC alleges Cuban sold his shares to avoid losses of $750,000 prior to the announcement of the company. He is charged under the following sections:

For violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, the SEC wants to permanently enjoin Cuban from future violations of the federal securities laws, impose a financial penalty and force Cuban to surrender the money he saved with the move.

Mark Cuban responded and told Reuters he did nothing wrong and will fight this complaint vigorously.