Mark Cuban: Meet the SEC
Maybe the disastrous Jason Kidd trade made Mark Cuban think that he needed better information before he pulled the trigger on a big deal.
Cuban was sued by the SEC today for insider trading. Embarrassingly, Cuban allegedly tried to game the market on a crappy stock that nobody’s ever heard of: Mamma.com. The company is now called Copernic, and its stock stinks.
The complaint alleges that Cuban violated an agreement to keep certain information confidential:
Despite agreeing in June 2004 to keep material, non-public information about an impending stock offering by Mamma.com Inc. confidential, Cuban sold his entire stake in the company - 600,000 shares - prior to the public announcement of the offering. By selling when he did, Cuban avoided losses in excess of $750,000.
CNBC is enjoying reminding people that Cuban made his fortune selling his company Broadcast.com to Yahoo just before the dot com bubble burst. But let’s also remember that lots of people have become rich by getting the hell away from Yahoo.
Still, even if true, things are better for Cuban than they could be. At least he’s not being charged criminally (yet).
Statement from Cuban’s attorney, after the jump.
Update (2:21): Cuban released a statement from his attorney, Ralph Ferrara of Dewey & LeBoeuf, on his blog. Ferrara is a former general counsel for the SEC:
This matter, which has been pending before the Commission for nearly two years, has no merit and is a product of gross abuse of prosecutorial discretion. Mr. Cuban intends to contest the allegations and to demonstrate that the Commission’s claims are infected by the misconduct of the staff of its Enforcement Division.Mr. Cuban stated, “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.”
Yeah, if the SEC thought Cuban would just handle this “quietly,” they’ve got another thing coming. Are you ready to rumble?
Update (2:56): Professor Bainbridge engages in a long discussion about the SEC’s case:
My review of the complaint suggests that the SEC has a pretty good case, assuming they can prove out the facts alleged, and they get a court willing to give the rules a liberal construction on one key point.The central legal issue in this case likely will be whether Cuban assumed a fiduciary obligation of confidentiality with respect to Mamma.com.
But looking at Ferrara’s bio, there isn’t going to be a single point that comes “easy” for the SEC.
No, Really, I’ve Got This Great Idea. I Will Sell Stocks Short, Then Dig Up And Publish Dirt On Them. It’s Totally Awesome! [Dealbreaker]
Breaking News: Mark Cuban Charged with Insider Trading [WSJ Law Blog]
The Insider Trading Charges Against Mark Cuban [Business Associations Blog]
SEC v Cuban.pdf
(47) Comments
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It's like WSJ's sloppy seconds here lately.
Dude, could you get a worse picture of the guy?
Somehow he can spin this in to owning the Cubs, right?
I CALLED IT!!!!! See post 20 in the wedding article
First to say that Wedding Watch #20 has psychic powers...
2, It's an Onion picture. He did not really grow this beard.
4,
lol damn anonymous commenting.
I was #20, nice try though.
so maybe Obama shouldn't take his advice?
The SEC can't impose criminal sanctions only civil sanctions. C'mon Elie, didn't you take admin law.
When did Bin Laden buy the Mavericks?
"The company is now called Copernic and its stock, stinks."
Why have an "editor" who can't write a single fucking declarative sentence without at least one mistake?
A sack of nickels should be liberally swung at the nearest GULCers head, RIGHT MEOW!!!
A sack of nickels should be liberally swung at the nearest GULCer's head, RIGHT MEOW!!!
Your editing, stinks.
Any word on whether Jordan Brudner and Daniel Gaspar are racists?
7- you got me. Congrats on the psychic powers... so how long is this downturn gonna last? (I mean the one in ATL quality not the economy)
This just in, Jordan Brudner and Daniel Gaspar are racists but are trying to tone it down.
I'm amazed, that it too,k until post number 13 before someone criticized that, comma.
8 is correct. Elie -- the SEC cannot seek criminal sanctions. It can only seek civil sanctions (disgorgement, injunction, d&o bar, etc.) The DOJ is the agency that may seek criminal sanctions.
So, for instance, if the insider trading is bad enough, the SEC may refer the case to the DOJ, and there may be two parallel actions -- a civil one by the SEC, and a criminal one by the DOJ.
Former Thelen and current Orrick partner Tom Glascock (aka Glass Cock) here, wondering what Elie meant in the paragraphing beginning "CNBC is enjoying..." Is Elie comparing the sale of a company in a sector that is overbought to the sale of shares of stock while in possession of material nonpublic information??? And what does he mean with the reference to people making money by "getting the hell away from Yahoo"? Is that a reference to short sellers? The rise of Yahoo's competitors? The cost of donuts on the UWS?
Palace coup at Cadwalader. Thanks for the heads up ATL :(
http://www.thelawyer.com/cgi-bin/item.cgi?id=135697&d=415&h=417&f=416
Any word on Jordan Brudner and Daniel Gaspar being racist?
Nice catch #20. Elie will have it up as soon as it is reported on the WSJ Blog.
anyone know what law firm is working with cuban on this?
11 & 12 -- WHY ARE YOU INCITING VIOLENCE AGAINST GULCers?
Nice and funny opening paragraph. Would have been even better if the stock transaction came after the Kidd trade but ... why let the facts get in the way.
11 & 12 -- WHY ARE YOU INCITING VIOLENCE AGAINST GULCers?
"CNBC is enjoying reminding people that Cuban made his fortune selling his company Broadcast.com to Yahoo just before the dot com bubble burst. But let's also remember that lots of people have become rich by getting the hell away from Yahoo."
What exactly is the relationship between selling a company to yahoo and "getting the hell away from yahoo"? This paragraph, like so many of Elie's others, makes very little sense.
I think Cuban looks good with the Kimbo Slice beard.
glasscock, you're an idiot. forget already about the autoadmit litigation? epic fail along the lines of mysTTTal's typos
So who's representing Cuban?
Even ESPN's coverage of this story is far better.
That is the most inane analogy I have ever seen. Your choice of photo also shows where you stand in terms of bias. Is this type of biased sophomoric rhetoric what we have to look forward to from ATL? I miss David Lat already
Brian Cuban
8, 18 - you're right, but Elie never states that the decision to bring criminal charges is up to the SEC, he simply writes that Cuban could be charged criminally
I totally respect Cuban for going out in public looking all Grizzly Adams like that. What a stud.
23, 30 - "Cuban released a statement from his attorney, Ralph Ferrara of Dewey & LeBoeuf"
"My review of the complaint suggests that the SEC has a pretty good case, assuming they can prove out the facts alleged, and they get a court willing to give the rules a liberal construction on one key point."
What kind of an analysis is that? Does anybody ever really have a bad case if they can prove the facts alleged and get a liberal ruling on a key point? This dipstick is essentially saying that they have a good case if they can win it. I want this guy's job if that is as in depth as you gotta go.
Ralph Ferarra is a smart smart man. I attended a dinner he hosted and was impressed. Mark is in good hands.
Leonidas, you are wrong
Correct 33. Somebody should sell short 8 and 18's reading comprehension skills. No bail out for you.
Mark Cuban can't afford to lose $750,000? I know that sort of loss is painful for anyone, but when you're a billionaire and you own a profitable sports franchise it isn't like that sort of hit is going to ruin you. However, a story like this could make it to where people may not want to do business with you. He probably thought he'd be fine and get off unscathed. He thought he was Anna Nicole Smith or Martha Stewart....that he was above regulation. Neither Anna's frivolous forum-shopping nor Marthat's shady insider trading paid off in the end and I hope Cuban gets a stiff sanction.
Elie, in addition to flunking admin law, you need to bone up on securities law. You claim "The complaint alleges that Cuban violated an agreement to keep certain information confidential:...." Sure it does, but what's important isn't that he may have violated the agreement -- he sold shares based upon nonpublic information (the fact that he agreed ot keep it confidential being "nonpublic".
Talk about missing the point.
First, he lives in Dallas. Second, he gets sued by the SEC for insider trading. Could it possibly get any worse?
Ferrara was GC of the SEC when they argued Transamerica v. Lewis in front of SCOTUS. My money is on Cuban.
Does the DOJ charge usually come after the SEC charge? Or is that a pretty uncommon occurrence?
Looks like Cuban is going with the firm he usually goes to, Fish & Richardson.
http://amlawdaily.typepad.com/amlawdaily/2008/11/mark-cuban-give.html
Looks like Cuban is going with the firm he usually goes to, Fish & Richardson.
http://amlawdaily.typepad.com/amlawdaily/2008/11/mark-cuban-give.html
The firm I worked for as a 1L summer used Copernic.
Man that place was a shit hole
Cuban must be held liable!