Hollywood Celebs’ Gossips

Mark Cuban

Mark Cuban Insider Dealing: Mark Cuban Accused of Mamma.com 600,000 Shares Insider Dealing! Internet entrepreneur and one of our favorite bloggers, billionaire Mark Cuban is charged with insider dealing for selling 600,000 Shares of search engine Mamma.com to avoid $750,000 losses back in 2004 by the Securities and Exchange Commission (SEC) today November 17. From Guardian:

American internet entrepreneur Mark Cuban, said to be worth close to $3bn, has been charged with insider dealing by the Securities and Exchange Commission.

Cuban, who owns the NBA basketball team the Dallas Mavericks, has been accused of selling 600,000 shares in the internet search engine Mamma.com after learning privately that the business was planning a stock offering. The SEC said that by disposing of the shares ahead of a public announcement, he avoided paper losses of $750,000.

According to the complaint filed by the SEC, Mamma.com invited Cuban to participate in the stock offering in June 2004, after he agreed to keep the information confidential. The offering was a private placement at a discount to the share price at the time and would have been dilutive to existing investors. Cuban was then the biggest shareholder with a stake of around 6.3%.

The SEC alleges that within hours of receiving the information, Cuban called his broker and told him to sell his entire stake. When the stock offering was later announced, the Mamma.com share price fell more than 9%.

Scott Friedstad, deputy director of the SEC’s enforcement division, said it was “fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge in the market.”

Defending on his blog BlogMaverik.com, Mr. Cuban said the SEC charge is “a product of gross abuse of prosecutorial discretion” and decided to contest the allegations. He writes:

I wish I could say more, but I will have to leave it to this, and let the judicial process do its job.

November 17, 2008

RE: SEC Civil Action in the United States District

for the Northern District of Texas, Dallas Division

Mark Cuban today responded to a civil complaint filed by the United States Securities and Exchange Commission in the United States District for the Northern District of Texas, Dallas Division. In its complaint, the Commission charges that Mr. Cuban engaged in violations of the federal securities laws in connection with transactions in the securities of Mamma.com Inc.

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.”