On behalf of John McDuff, Attorney at Law
Billionaire Texan Mark Cuban is still under scrutiny for alleged insider trading involving Internet search company Mamma.com. The Securities and Exchange Commission’s (SEC) investment litigation against Cuban seemed over after Northern District of Texas Judge Sidney A. Fitzwater dismissed the case in the summer of 2009. However, a recent Appeals Court decision resurrected the legal dispute.
The suit alleges that Cuban received confidential information concerning Mamma.com’s company stock and subsequently sold it because of that insider knowledge. The stock sale, by itself, did not violate insider-trading laws but there is a factual dispute as to whether Cuban had agreed with Mamma.com’s CEO not to act on that confidential knowledge.
The Fifth Circuit Court of Appeals found it plausible that Cuban had an agreement with the CEO to refrain from selling the company’s stock for a certain period of time, but did it anyway. The case is now back in the trial court’s discovery process and will likely take some time to flesh out the remaining issues.
Cuban, who owns the Dallas Mavericks, is an active investor. Active investors often find themselves being investigated by the SEC or Texas State Securities Board. Sometimes these investigations even turn into criminal charges or lengthy and costly civil suits, such as the one Cuban is battling.
Although investigations do not always result in lawsuits or charges, it is always important to take the claims seriously because the consequences can be severe.
Source: Austin American-Statesman, Statesman.com