Mark Cuban's Greatest Insider Trading Risk
Cuban has clearly been building his defence on the idea that he was under no obligation to keep the non-public information he got from the CEO, confidential, and therefore remained free to trade the stocks. At the heart of what we've heard about his defense is Cuban's claim that he never agreed to keep confidential the fact that Mamma.com was planning a PIPE offering. Unfortunately for Cuban, the SEC doesn't have to prove he agreed to keep this specific piece of information secret.
If Cuban and the CEO, Guy Faure, regularly shared confidential information, that could be enough for the SEC to nail him, Law professor Stephen Bainbridge explains in a post on the Cuban insider trading case.
"Alternatively, the SEC may be able to show that the Mamma.com CEO and Cuban had a pattern or practice of sharing confidences such that the recipient of the information knows or reasonably should know that the speaker expects the recipient to maintain the information’s confidentiality. This would also satisfy Rule 10b5-2. In addition, the Chestman case suggested that such a pattern could also give rise to fiduciary relationships, at least among family members."
We're betting that this is exactly the kind of case the SEC plans to mount against Cuban.
Mark is a smart guy but will probably not get away with this maneuver.
a) getting only info that's public
b) getting info that prevents you from trading on it
It's not that difficult. Mark is probably very used to talking with big wigs, so he should really know this very well.
Just the fact that the very next day the info became public and everyone else traded on it - that's probably enough evidence.
Two words: Valerie Plame.
The assholes in the bush administration have stooped to very low tactics in the past. Would I believe that Cuban was set up? You betcha.
Don't worry, Mark- they show Mavs games in the rec room in cellblock B.
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It seems pretty obvious that he is going to be convicted as the case seems cut and dried.
Presumably he has been going back and forth on this with the SEC for at least a few months. Why he didn't settle, pay the fine, and move on, is a mystery.
Barney
Sad but true. Big guys cheat for short money all the time....and get caught. Weird but true.
Another case of greed and talking too much.
clik : http://www.forbes.com/lists/2005/54/IXMB.html
He made a trading decision to save 750K ... which is 0.04% of is NET worth ... Thinking he would not get cought.
And now the media is all over this and will probably will affect his reputation more then 750k worth.
Looks like greed has caught him too!!
My guess is that Cuban will take a public stand that this is a government steamroll operation but he will settle before the case goes to trial.