Cuban reportedly charged with Insider Trading

[92bDad]

On the same but different view...what is the big deal.

Let's see, you get information that an item you own is about to lose value, but currently it has some value and if you sell today, you will not lose as much than if you wait and sell tomorrow.

That would be like me buying a car, realizing that there is a major mechanical problem and then turning around and selling it before it completely breaks down. I might lose, some but not as much as if I had kept the car until in broke down.

Isn't there something about buyer beware?

This appears to be much todo about nothing...Cuban is not evil, he's just a guy who managed to capitalize on some opportunities to make some serious money. By selling these 600,000 shares of stock he kept himself from losing $750,000. So being that he's a billionaire, that's less than 1% of his worth.

I'm worth less than 100,000...so if I save $750 by selling my car that is about to break down, am I cheating or making a wise money move to get out from under before it gets worse?

What about that Police officer who lets me off with a warning, is he cheating the public or am I get away with breaking the law...

This appears to be about perspectives and when we see 750,000 flying around, we get carried away with terms like "Insider Trading"

Did Cuban not save MILLIONS of Dollars by getting ready of a depreciating assett (Michael Finley)...but that was considered legal???

Of course, this will give Stern some other league bylaw to go after Cuban...hey, this is like Jerry Jones...any publicity is good publicity!!!

[mary]

Originally Posted by u2sarajevo

"ditto" and "giggle"

[basketballgirl25]

Originally Posted by rabbitproof

Oh how the rich stay rich aint shocking.

I agree. In the courts, Cuban is scot-free but what will Stern and the other owners want to do?

other owens really do anything to Cuban? I don't think they could. Stern could but I don't see him doing anything

[erdubya]

"I didn't do it" - Said the Mark.

http://blogmaverick.com/2008/11/17/the-sec/

[Darth Ape]

Originally Posted by erdubya

"I didn't do it" - Said the Mark.

http://blogmaverick.com/2008/11/17/the-sec/

Say it in court, sir. And don't lie, or you'll wind up in prison like Martha Stewart.

Still, criminal conviction or no criminal conviction, if he did it, Cuban is still a felon in my book.

[jthig32]

Huh, Cubes wrote about this on his blog in 2005:

Finally, and this has nothing to do with Naked Shorting, I wanted to reference Mamma.com. I had purchased stock
in Mamma.com in hope that it could be an up and coming search engine. I thought I had done some level of due
diligence. Talked to the company management. Talked to some employees who worked in sales. Read the SEC Filings. I
knew that they had a checkered past and had been linked to stock promoter Irving Kott, and that their law firm still
handled some of Kotts business, but the CEO, Chairman, lawyers all said that things were reformed and the company was focused on its business.

Then the company did a PIPE financing. Im not going to discuss the good or bad of PIPE financing other than to say
that to me its a huge red flag and I dont want to own stock in companies that use this method of financing .
Why? Because I dont like the idea of selling in a private placement, stock for less than the market
price, and then to make matters worse, pushing the price lower with the issuance of warrants.So I sold the
stock.

So, taking this at face value, you wouldn't THINK Cubes would write about this publicly if he thought he did anything wrong.

[ty]

Originally Posted by erdubya

"I didn't do it" - Said the Mark.

http://blogmaverick.com/2008/11/17/the-sec/

[grbh]

Originally Posted by 92bDad

On the same but different view...what is the big deal.

Let's see, you get information that an item you own is about to lose value, but currently it has some value and if you sell today, you will not lose as much than if you wait and sell tomorrow.

That would be like me buying a car, realizing that there is a major mechanical problem and then turning around and selling it before it completely breaks down. I might lose, some but not as much as if I had kept the car until in broke down.

Isn't there something about buyer beware?

This appears to be much todo about nothing...Cuban is not evil, he's just a guy who managed to capitalize on some opportunities to make some serious money. By selling these 600,000 shares of stock he kept himself from losing $750,000. So being that he's a billionaire, that's less than 1% of his worth.

I'm worth less than 100,000...so if I save $750 by selling my car that is about to break down, am I cheating or making a wise money move to get out from under before it gets worse?

What about that Police officer who lets me off with a warning, is he cheating the public or am I get away with breaking the law...

This appears to be about perspectives and when we see 750,000 flying around, we get carried away with terms like "Insider Trading"

Did Cuban not save MILLIONS of Dollars by getting ready of a depreciating assett (Michael Finley)...but that was considered legal???

Of course, this will give Stern some other league bylaw to go after Cuban...hey, this is like Jerry Jones...any publicity is good publicity!!!

Big difference. As an average car buyer, I am able to take the car you a selling and have a mechanic take a look at it before buying it. As an average investor I am NOT able to speak with a CEO prior to buying or shorting their shares.

[alexamenos]

plus...it's a helluva lot of easier to accuse someone of insider trading than it is to prove they engaged in insider trading....even when they've engaged in insider trading.

Basically, the plaintiff has to show that insider relied upon *material non-public information* rather than *public information*, so it generally comes down to an argument over what the insider was thinking and why, and the insider always has the advantage in this regard.

anyhoo....

A more interesting discussion is whether there's any real need to regulate insider trading and whether anything is actually accomplished by regulating insider trading...

[LonghornDub]

Originally Posted by alexamenos

plus...it's a helluva lot of easier to accuse someone of insider trading than it is to prove they engaged in insider trading....even when they've engaged in insider trading.

Basically, the plaintiff has to show that insider relied upon *material non-public information* rather than *public information*, so it generally comes down to an argument over what the insider was thinking and why, and the insider always has the advantage in this regard.

Plus, this suit is in a traditionally defendant friendly court, and Cubes' jurors are going to be Dallas residents who will be way more likely to side with the owner of the local basketball team than with the big, bad SEC.

Cubes has a definite home court (no pun intended) advantage here.

[DirkFTW]

Originally Posted by LonghornDub

Plus, this suit is in a traditionally defendant friendly court, and Cubes' jurors are going to be Dallas residents who will be way more likely to side with the owner of the local basketball team than with the big, bad SEC.

Cubes has a definite home court (no pun intended) advantage here.

You just jinxed him to a jury consisting of Darth Ape and friends.

[Underdog]

Originally Posted by LonghornDub

Plus, this suit is in a traditionally defendant friendly court, and Cubes' jurors are going to be Dallas residents who will be way more likely to side with the owner of the local basketball team than with the big, bad SEC.

Cubes has a definite home court (no pun intended) advantage here.

I hate when people say "no pun intended" right after they make a brilliant pun...

[Rick41]

I'm sure Stern is having a field day with this one.

[Darth Ape]

Originally Posted by LonghornDub

Plus, this suit is in a traditionally defendant friendly court, and Cubes' jurors are going to be Dallas residents who will be way more likely to side with the owner of the local basketball team than with the big, bad SEC.

Cubes has a definite home court (no pun intended) advantage here.

I heard exactly the opposite, that this court is extremely NON friendly to defendants... something like only one judgement for the defense in the last two years.

[LonghornDub]

Originally Posted by Darth Ape

I heard exactly the opposite, that this court is extremely NON friendly to defendants... something like only one judgement for the defense in the last two years.

I'm not sure that's accurate, but if it is, it refers to jury verdicts, meaning that the case has to actually get to trial. Most cases don't.

I was actually referring to the court itself (i.e. the judges) when I said the court is defendant friendly. This summer, I worked on two large corporate litigations in that court, and we (the defense) won both at summary judgment. So, that statistic obviously must not include pre-trial judgments. The attorneys I know all feel very, very comfortable litigating for the defense in that court.

If what you heard is correct as to the jury verdicts, the second thing I mentioned is still massively in Cuban's favor. He's going to get a jury full of Dallas residents, some of whom will probably be Mavericks fans.

I dunno if KG works in Dallas, but maybe he can chime in here...

[Stranger]

Originally Posted by jthig32

Huh, Cubes wrote about this on his blog in 2005:



So, taking this at face value, you wouldn't THINK Cubes would write about this publicly if he thought he did anything wrong.

The SEC complaint appears to mention that blog post:

"25. Cuban later publicly stated that he had sold his Mamma.com shares because the
company was conducting a PIPE, which issued shares at a discount to the prevailing market
price and also would have caused his ownership position to be diluted. Cuban never disclosed to Mamma.com that he was going to sell his shares prior to the public announcement of the PIPE."

I think the key thing is that the blog doesn't mention that he had confidential knowledge of the PIPE and sold his shares before it was publically announced. But I agree that if he thought he had commited a serious crime, he probably wouldn't have drawn attention to the sale at all in his blog.

It sounds to me like Cuban didn't think it was a big deal, but from the complaint it appears that the SEC has solid evidence that he did in fact violate insider trading rules.

[Usually Lurkin]

If I had this hanging over me I wouldn't pay Don Nelson his money, either.

[xavier]

what does this mean for our team?

[Zki41]

Cuban would be paying less than he would if he got fined by the NBA for misconduct...

/sarcasm

[alexamenos]

this strikes me as being such a not-a-big-deal...as near as I can tell this is at the root of Cuban's wrong doing:

On June 28, Mamma.com Chief Executive Guy Faure e-mailed Cuban asking him to call him "ASAP," the SEC said. Cuban called four minutes later from the American Airlines Center in Dallas, home of the Mavericks, and spoke to Faure for about eight minutes.

Faure, who resigned last year, began the conversation by telling Cuban he was about to give him confidential information. Cuban agreed to keep it to himself, the SEC said.

Cuban became upset and angry during the conversation, and said that he didn't like PIPEs because they dilute the value of company stock for existing shareholders, according to the SEC. At the end of the call, Cuban said, "Well now I'm screwed. I can't sell."

so, the CEO calls Cubes and says, 'hey buddy, can you keep a secret?'

Cubes says, 'yeah, I can keep a secret.'

at this point cubes has no idea what the secret is, he's just blithely agreed to keep a secret.

CEO says, 'here's the secret: I'm going to screw you hard.'

Cube's options at this point are to sell the stock and get screwed by the SEC or not sell the stock and get screwed by the company. That he chose plan "a" over plan "b" doesn't make a big difference to me.

[alexamenos]

An alternate theory on why the SEC is up in arms and about a piss-ant little stock deal from four years ago.

Cuban's most recent effort to expose official squalor to the disinfecting rays of public sunlight is the investigative website BailoutSleuth.com, which is devoted to chronicling and exposing the details of the largest economic crime in history: The theft of trillions of dollars from the middle class to cushion the financial collapse of politically favored Wall Street welfare whores.

Mr. Cuban's willingness to finance this indispenseable exercise in forensic journalism has earned him more than the self-congratulatory disapproval of Bill O'Reilly: It has made him an Official Enemy of the Ruling Oligarchy and exposed him to retaliation by the Regime.

[Darth Ape]

I think what's getting lost here is what a really poor business guy Cuban is. I mean, seriously. Mamma.com? Did he really think that pethetic site would ever make money? The guys deserved to lose his ass on that one. Instead, he tried to cheat the system.

And need I remind you that Cuban is the same guy who claimed in 1999 that the mp3 format would be dead in six months and that his stupid HDNet channel would kill youtube and internet video.

Come on. If this guy ever invests his money in something, we should all short sell it immediately. He made his fortune on an awful, stupid product (broadcast.com) that's worth about 50 bucks to Yahoo these days. Seems like the one thing Cuban knows how to do is screw people over. Looks like he tried to do it again, only this time he broke a few federal laws. Hopefully this latest episode is finally exposing Cuban for the fraud that he's always been.

[kg_veteran]

Originally Posted by alexamenos

An alternate theory on why the SEC is up in arms and about a piss-ant little stock deal from four years ago.

That theory makes a lot of sense to me.

[alexamenos]

It makes sense to me to.

Cuban didn't have any fiduciary duty to the other stockholders in the company...he's only an insider by virtue of the fact the CEO told him something. This is nothing, in other words.

That mamma.com stock is worthless today, and the SEC is going to go after Cuban 4 years after the fact because the CEO of the Company tried to pitch Cuban on buying more stock at a discounted price? This looks like a vendetta, and the question is, 'why'?

[Underdog]

Originally Posted by alexamenos

An alternate theory on why the SEC is up in arms and about a piss-ant little stock deal from four years ago.

Great read!


1) They're gonna have a hard time sticking this to Cuban with a case based on nothing but hearsay (it's not like Martha Stewart, where she OWNED the company...)

2) I love Mark Cuban (especially because he pisses 'Ape off!)

[alexamenos]

that's the thing that gets me about this -- I didn't realize it was possible to be an insider without really being an insider, ie a director or manager of a company. Cuban was just a guy that owned a lot of stock in the company.

maybe there is something in some reg which says that if you own more than x% and the CEO of the company gives you some juicy gossip then you're an insider....i don't know....

still, this is a pretty piss-ant thing and the timing is remarkably coincidental.

[alexamenos]

so here's what trusty ole wikipedia has to say about the meaning of "insider"

In the United States, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors and any beneficial owners of more than ten percent of a class of the company's equity securities....

...In the United States and many other jurisdictions, however, "insiders" are not just limited to corporate officials and major shareholders where illegal insider trading is concerned, but can include any individual who trades shares based on material non-public information in violation of some duty of trust. This duty may be imputed; for example, in many jurisdictions, in cases of where the a corporate insider "tips" a friend about non-public information likely to have an effect on the company's share price, the duty the corporate insider owes the company is now imputed to the friend and the friend violates a duty to the company if he or she trades on the basis of this information.

As I understand matters, Cuban owned less than 10% of the company's equity and he wasn't a director, hence he is not an "insider" by definition. As I read this, the only way he is an "insider" is if he has violated some duty of trust. I see a CEO of a company trying to sell more stock to a big investor, but I don't see any duty of trust on the matter.

It looks like the SEC's case boils down to the CEO of a failed company swearing that 4 years ago in an 8 minute cellphone call Mark Cuban made some solemn oath to that CEO. That looks pretty flimsy to me.

[jthig32]

Originally Posted by Darth Ape

I think what's getting lost here is what a really poor business guy Cuban is. I mean, seriously. Mamma.com? Did he really think that pethetic site would ever make money? The guys deserved to lose his ass on that one. Instead, he tried to cheat the system.

And need I remind you that Cuban is the same guy who claimed in 1999 that the mp3 format would be dead in six months and that his stupid HDNet channel would kill youtube and internet video.

Come on. If this guy ever invests his money in something, we should all short sell it immediately. He made his fortune on an awful, stupid product (broadcast.com) that's worth about 50 bucks to Yahoo these days. Seems like the one thing Cuban knows how to do is screw people over. Looks like he tried to do it again, only this time he broke a few federal laws. Hopefully this latest episode is finally exposing Cuban for the fraud that he's always been.

Except that he was already a self-made millionaire before he "made his fortune on an awful, stupid product".

Man...what a terrible business guy.

[92bDad]

Let's see...is this similar to anything that is actually taking place right now?

Look at all these high-end investors, who are pulling their money out of the stock market because of the insider information concerning the next POTUS? They are concerned about losing money through higher taxes, so they are selling in an effor to put their gains into a more strategically safe place where the next administration can't touch it.

In other words, they are making a calculated choice to sell before losing more money...even though they really don't know for sure what will happen.

Is that considered insider trading or just a good business decision?

What about the reverse...what if someone passes along a hot tip that a stock is getting ready to go up and you stand to gain a ton of money. However, when you do...the stock goes down...can the person with the hot tip go to jail for a false hot tip?

This is both funny and sad...how much time and resources are being wasted on such a trivial topic?

[jthig32]

Originally Posted by 92bDad

Let's see...is this similar to anything that is actually taking place right now?

Look at all these high-end investors, who are pulling their money out of the stock market because of the insider information concerning the next POTUS? They are concerned about losing money through higher taxes, so they are selling in an effor to put their gains into a more strategically safe place where the next administration can't touch it.

In other words, they are making a calculated choice to sell before losing more money...even though they really don't know for sure what will happen.

Is that considered insider trading or just a good business decision?

What about the reverse...what if someone passes along a hot tip that a stock is getting ready to go up and you stand to gain a ton of money. However, when you do...the stock goes down...can the person with the hot tip go to jail for a false hot tip?

This is both funny and sad...how much time and resources are being wasted on such a trivial topic?

Those are so not similar.

[FreshJive]

Originally Posted by 92bDad

next POTUS?...... higher taxes

Public information?!?

[Darth Ape]

Originally Posted by FreshJive

Public information?!?

This afternoon, I had insider information that I needed to take a crap, so I unloaded that stuff ASAP.

[92bDad]

So if we happen to get a tip on a stock we own...we are not on the board of that company, we are not in an executive position and it happens to be a tip from the CEO of said company who was trying to get us to buy more stock tomorrow at a lower price...would we keep our stock and lose money or given the opportunity would we act on that information and get rid of the shares we owned?

If there is anything 'Insider' violated...perhaps its on that CEO who tried to get a wealthy shareholder to buy in a bit more. Perhaps that CEO should be put up on charges for violating confidentiality.

Of course I could reverse my stance if Cuban signed any documents that stated he would keep information confidential and thus not make any stock decisions based on the secret information provided. Without such a document, everything is based on everyone word of mouth.

Seems to me that the unethical behavior was on the CEO...instead of Cuban who acted as many to most of us would, in our own best interest.

[FreshJive]

Originally Posted by Darth Ape

This afternoon, I had insider information that I needed to take a crap, so I unloaded that stuff ASAP.

Damnit half my 401K was in Ape sh*t.

[Mavdog]

Originally Posted by alexamenos

A more interesting discussion is whether there's any real need to regulate insider trading and whether anything is actually accomplished by regulating insider trading...

are you kidding?

maintaining a level playing field is critical to the integrity of the market.

manipulation by those who are privy to information not available to the public would produce wins for those who do and losses for those who don't.

[MavsX]

Originally Posted by Darth Ape

This afternoon, I had insider information that I needed to take a crap, so I unloaded that stuff ASAP.

haha, first time i have laughed WITH you. rep +1

EDIT: rep. feature apparently broken.

[alexamenos]

Originally Posted by Mavdog

are you kidding?

maintaining a level playing field is critical to the integrity of the market.

manipulation by those who are privy to information not available to the public would produce wins for those who do and losses for those who don't.

You're saying there is no question that the regulation of insider trading is a good thing. Obviously I disagree. I think the subject is debatable.

Cheers

[Mavdog]

Originally Posted by alexamenos

It looks like the SEC's case boils down to the CEO of a failed company swearing that 4 years ago in an 8 minute cellphone call Mark Cuban made some solemn oath to that CEO. That looks pretty flimsy to me.

no, it seems that the case boils down to phone and e mail records of when the info on the sale of the new shares was given to cuban and when cuban told his stockbroker to sell.

it seems that several of the calls may have been recorded as well, the complaint uses specific quotes on what was said.

the most damning quote is cuban saying that he "is screwed" as he admits he can't sell until after the info is made public....yet he did sell before the announcement.

[Mavdog]

Originally Posted by alexamenos

You're saying there is no question that the regulation of insider trading is a good thing. Obviously I disagree. I think the subject is debatable.

Cheers

could you state what positives would result from allowing people to game the market by using info that is not available to everybody else?

[alexamenos]

Originally Posted by Mavdog

could you state what positives would result from allowing people to game the market by using info that is not available to everybody else?

I assume you are familiar with the arguments for legalizing insider trading, so perhaps you could recount some of the positives.