WASHINGTON, Nov. 17, 2008
Mark Cuban Charged With Insider Trading
SEC Says Dallas Mavericks Owner Used Confidential Info To Avoid $750K In Losses
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Play CBS Video Video Mavs Owner In Hot Water Mark Cuban, the brash and outspoken owner of the Dallas Mavericks has been accused of insider trading according to the SEC. Armen Keteyian reports.
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Video Mavericks' Number One Fan CBS News' Kelly Cobiella sits down with Dallas Mavericks owner Mark Cuban to discuss his love of the game.
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In this Nov. 9, 2008 file photo, Dallas Mavericks owner Mark Cuban yells at referees during the second half of their NBA basketball game against the Los Angeles Clippers, in Los Angeles. (AP Photo/Mark J. Terrill)
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Interactive Cracking Down SEC investigations, a new task force at the Justice Department, action in Congress...learn about who's doing what to catch white-collar criminals.
The Securities and Exchange Commission filed a civil lawsuit against Cuban in federal court in Dallas.
The SEC says Cuban committed fraud in 2004 when he dumped his entire stake - 600,000 shares - in the web site Mamma.com after learning the company was about to raise money by offering shares to private investors - at a discounted price, reports CBS News Chief Investigative correspondent Armen Keteyian.
The next day, when the news became public, shares in Mamma dropped more than 10 percent, allowing Cuban, the SEC alleges, to avoid more than $750,000 in losses.
"If what the SEC alleges Mark Cuban did is true, it was the most colossally stupid insider trading move ever," says Megan Barnett, News Editor for Portfolio.com.
That would be surprising since two years ago the brash, brilliant entrepreneur launched a web site designed to expose corporate fraud. But it would also be a part of the mad, mad world of a maverick businessman, who exploded onto the sports scene in early 2000 when he bought the Dallas Mavericks, shortly after selling his Internet company for $5 billion. When he wasn't being fined more than a million dollars for criticizing NBA officials, Cuban was financing a cutting-edge HD network, or dancing with the stars.
If found guilty of insider trading, Keteyian reports, the 50-year-old faces millions of dollars in penalties. In a statement today, he called the government's claims "false" and said he would fight the charges.
According to the Wall Street Journal, Cuban sold his ownership stake after learning the search engine company was raising money through a private investment in a public entity, or PIPE. In a PIPE transaction new shares are issued at a discount to the current trading price, the newspaper reported.
The SEC is seeking a court judgment against Cuban finding that he violated the antifraud provisions of the federal securities laws, an injunction against future violations, an unspecified civil penalty and restitution of the losses Cuban allegedly avoided.
Unless he is subject to an injunction, Cuban "is likely to commit such violations again in the future," according to the SEC suit.
Attorneys for Cuban in Washington and Dallas didn't immediately return telephone calls seeking comment.
Cuban, 50, also owns Landmark Theaters, a large national chain dedicated to independent films, and the HDNet cable television channel.
He is one of the richest people in the world, according to Forbes magazine, which pegged his net worth at $2.3 billion as of March 2007.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
Add a Comment See all 26 Comments
- If your going to prosecute him for insider trading maybe you should go after the CIA & NSA for all of their insider trading exploits.
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- Martha Stewart may have some inside information for him. Maybe she"ll make some cupcakes for him while he''s on sabbatical.
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- Typical suckface the first thing he does is blame someone else. Sound familar!
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- That boy is going to The Big House.
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"Mark Cuban Charged With Insider Trading"
cause you can never have enough money.
Let''s all send him a check.
He should never lose any money.- Reply to this comment
- smclimans
So you think that a justice department formed by the current president is investigating Cuban because he wrote an article critical of Obama? Now Obama has some power to do that as a president elect, can''t wait to see what happens after he is sworn in! - Reply to this comment
Amazing how this "incident" occurred in 2004,
but was not investigated until after he wrote
an article in Nov. 2008 that was critical of Obama
If you believe that this was coincidence,
I have some ocean-front property in Kansas I''d like to sell you.
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- LanceArmStng: So as long as you give and are high up, you should be able to do as you please. Even if it against the LAW. To HEELLLLLLE with this ASSSSS hole, I don''t care what he h.as done. I wont be sitting on my hands, Maybe you will From the sound of it you are sitting on something.
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- The question remains, if you were in his position would you sit pretty on stock and take a $760k hit? That''''s what I thought
Posted by LanceArmStng at 05:20 PM : Nov 17, 2008
I think you''re missing the point. The man could have lost much more than 3/4 of a mil. And his lifestyle would not have changed one iota.
It''s pure greed what he has done, and now, it''s time to pay the piper.
Hopefully he will.
So,, by the way you posted, you suffer from the same greed gene? - Reply to this comment
- I suppose some repub will somehow try to blame this on PRESIDENT Obama.
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- It probably doesn''t occur to most people that he was ahead of the curve on streaming video which created his great fortune and that he gives more to charity in a month than people even think about giving in a lifetime.
That''s right, let''s continue to call for the heads of those more successful and when all of them are taken down the public will be sitting with their hands open and there will be no more hand outs.
Look up some financial figures, Cuban pays over 50% in taxes which supports the masses.
Doesn''t the guy deserve to be rewarded for his success? Is this not America?
Having said that, he could have easily avoided this by not investing in a pathetic company and that shows a lapse in investment judgement.
The question remains, if you were in his position would you sit pretty on stock and take a $760k hit? That''s what I thought - Reply to this comment
- "No, what this guy did was infinitely worse than anything Martha Stewart was singled out for doing and held up as an "example"."
Martha Stewart went to jail for perjury so don''t compare this to what happened to her.
Bitter, Bitter, Bitter and you have the right to be but don''t fault this guy for doing what anyone else would have done. Here''s a little heads-up, the stock market is completely made up of insider trading. With-holding information from the general public has nothing to do with it.
Most of this information can be found on company investor relations pages. It''s easy to gather up a mob and go after those that are more successful. - Reply to this comment
- Stick him in jail. It will always be a mystery to me why anyone with all that money finds it necessary to cheat for a measley three quaters of a million dollars. Let him get a taste of what we ordinary citizens get when we cheat.
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- Last week Cuban derided obama for his choices of economic advisors, now he is being investigated...hmm
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- More $ than anyone could ever spend& still they steal more-a massive tax increase on these hogs is in order.
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- hey mark, if martha had to go to prison, so should you. guess you didn''t learn anything from her ordeal - you''re an idiot.
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- Dude, you just took the bait of a poser troll. Fish On!! Just remember the name & don''''t take the bait again.
Posted by Questionnews at 03:19 PM : Nov 17, 2008
LOL, yeah, hook, line and sinker.... - Reply to this comment
- A clasic example of an idiot. What is 750k to this guy pocket change or what.
Posted by antoniof123 at 03:15 PM : Nov 17, 2008
I agree with the idiot part, but the rest is called greeeed!
And that''s what''s wrong in this country today.
Forget what tomorrow might bring, lets just take the money and run. - Reply to this comment
- YOU ARE TRULY AN IDIOT. Your knowledge of the world around you is apparently quite limited. Insider trading gives a very few individuals a MONSTROUS advantage over the general public - has it occurred to to your pea-brained self that the investors who bought the shares he sold paid more than they should have?????? What if the party involved ... happened to
be YOU????????????????
Posted by cbs3200 at 02:28 PM : Nov 17, 2008
Dude, you just took the bait of a poser troll. Fish On!! Just remember the name & don''t take the bait again. - Reply to this comment
- He is one of the richest people in the world, according to Forbes magazine, which pegged his net worth at $2.3 billion as of March 2007.
A clasic example of an idiot. What is 750k to this guy pocket change or what. - Reply to this comment
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