NBA Dallas Mavericks billionaire owner Mark Cuban’s insider trading suit will proceed with its first hearing this Tuesday when Cuban’s attorneys set motions to have the suit dismissed.
The SEC alleges Cuban acted on an insider tip that Mamma.com Inc. would sell new shares via a private offering back in 2004. The tip allegedly prompted Cuban to sell his shares (600,000 shares) thereby avoiding $750,000 in losses.
When firstly reported on November 17,2 008, In the initial SEC press release, the Commission said
“Within hours of receiving this information, according to the complaint, Cuban called his broker and instructed him to sell Cuban’s entire position in the company. When the offering was publicly announced, Mamma.com’s stock price opened at $11.89, down $1.215 or 9.3 percent from the prior day’s closing price of $13.105. According to the complaint, Cuban avoided losses in excess of $750,000 by selling his stock prior to the public announcement of the offering.”
The SEC alleges Cuban had a fiduciary relationship with the company because of a confidential agreement; therefore he should not have acted on the confidential material and non-public tip.
Cuban’s team counters he was never an insider because he never had a fiduciary relationship with the firm at all.
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