Tuesday, November 18, 2008

Stupid, stupid, stupid

SEC Files Insider Trading Charges Against Mark Cuban

Washington, D.C., Nov. 17, 2008 — The Securities and Exchange Commission today charged Dallas entrepreneur Mark Cuban with insider trading for selling 600,000 shares of the stock of an Internet search engine company on the basis of material, non-public information concerning an impending stock offering.

Now of course these are just charges, nothing proven yet, but from my experience the SEC is really good in these cases. Mark, you just tossed away your chance to fulfill your dream of buying the Cubs. This is MLB's excuse for keeping you out of their little club.

What is it with the uber-rich? He avoided a loss of about $750,000 (allegedly) on the deal. That's chump change for someone like Cuban. Ditto Martha Stewart a while back. Perhaps it's that Type A win at all costs personality?

Dumb. Really dumb.


Khyle said...

Though I'm no lawyer, to me it looks like Mamma.com almost tried to trap Cuban so he couldn't sell.

Just by taking the act of calling him, it meant he couldn't sell. Which is BS in my opinion.

schmidlap said...

So much chatter today about whether or not this affects his bid for the Cubs.

Cubs? Wha? Chatter should be about how much time he's gonna be doing.

Cuban's going to be trading soap for cigarettes, not relief pitching for outfielders.

Peter said...

Well, Khyle, he COULD sell if he disclosed to the market what he knew. That is only fair.

Unfortunately for Mark, he was an outspoken war/Bush critic. Bad timing if DOJ wants some revenge.

Khyle said...

Peter - but he couldn't go public with it, that's the whole point right?

Seems like the DOJ is saying if you don't want someone to sell your stock, call them with some potentially negative news, and tell them to keep it confidential. That doesn't make sense to me.

Rousing Rabble said...

I know that someone here will correct me if I'm wrong, but isn't the action being taken here by the SEC "civil" in nature? Is it common for a civil case to become criminal as well?

Peter said...

I can handle this one, RR.

Yes, you're right, the SEC action is civil. They seek to recover the profits (or losses avoided, and injunctive relief (which is a bigger deal than it sounds, it disqualifies you from a lot of exemptive provisions under the securities laws.)

DOJ didn't used to like these kind of cases. They were difficult to prosecute and not "sexy." But now the regulators and Justice have been working much more closely (post-Enron) and parallel proceedings aren't unusual.

The amount of $$ isn't substantial here but a lot of bang for the prosecutorial buck with the celebrity factor.

Peter said...

Khyle, I agree it presents difficult situations but he could have avoided the contact with the issuer.