The anything-but-average Mark Cuban is in the spotlight — again. But this time, it’s not for his vocal behavior during basketball games.
The serial entrepreneur and business tycoon, who currently owns the Dallas Mavericks and is one of the finalists to buy the Chicago Cubs, is in hot water for insider trading, according to the Securities and Exchange Commission, which has filed a civil lawsuit against Cuban.
Cuban, a billionaire who started his career selling local-area network and connectivity products, may be ending his career because he tried to avoid $750,000 in stock losses. The SEC is charging Cuban with insider trading based on knowledge he had about Internet search company Mamma.com (now Copernic).
“Fundamentally Unfair’
In June 2004, Cuban was contacted by Mamma.com’s chief executive and told in confidence about a private investment in public equity, or PIPE, offering, according to court documents. Cuban was angry about the PIPE offering and said, “Well, now I’m screwed, I can’t sell.”
The information was supposed to be kept confidential by Cuban, but he sold all his shares the next day.
Scott Friestad, deputy director of the SEC’s Division of Enforcement, said Cuban promised to keep the information private, but instead, four hours later, he sold all his shares.
“As we said, it is our position that it is fundamentally unfair for people to use their access to nonpublic information for personal gain,” said Friestad.
Cuban sold 600,000 shares in the company and would have lost $750,000 if he had not sold the stock, according to Friestad.
Cuban responded Monday on his official blog. “I wish I could say more, but I will have to leave it at this and let the judicial process do its job,” he wrote, and then referred to a prepared statement: “I am disappointed that the commission chose to bring this case…