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Oct 7, 2009 3:09 pm US/Central
SEC Plans To Appeal Cuban Trading Case
DALLAS (CBS 11 NEWS/AP) ―
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Mark Cuban, SEC graphic
Lauren Victoria Burke/AP
The Securities and Exchange Commission said Wednesday it plans to appeal a federal judge's dismissal of the agency's insider-trading lawsuit against Mark Cuban.
The SEC filed a notice in U.S. District Court in Dallas that it plans to take its case to the 5th U.S. Circuit Court of Appeals in New Orleans.
The outspoken billionaire owner of the NBA's Dallas Mavericks was accused in a civil lawsuit of selling his shares and avoiding a $750,000 loss after receiving confidential information about the Internet search engine company Mamma.com Inc. in 2004.
Click here to read the entire SEC appeal.
SEC Spokesman John Nester released a statement that said, in part, "We believe the District Court erred in dismissing our complaint and we look forward to presenting our position to the Fifth Circuit Court of Appeals."
U.S. District Judge Sidney A. Fitzwater dismissed the case in July, ruling the agency didn't allege that Cuban had agreed not to trade on confidential information.
Fitzwater gave the SEC 30 days to amend the complaint if the agency could allege that Cuban agreed not to sell stock when he told the company's chief executive that he wouldn't divulge secret information he was about to receive.
Rather than amend the lawsuit, the SEC chose to appeal.
"We believe the District Court erred in dismissing our complaint, and we look forward to presenting our position to the Fifth Circuit Court of Appeals," SEC spokesman John Nester said in a statement.
According to the SEC, Cuban agreed not to share any information before Mamma.com Chief Executive Guy Faure told him in a phone call that the company planned to raise money through a private stock offering. The complaint says Cuban became angry because he said the plan would hurt his stock's value and ended the call by saying, "Well now I'm screwed. I can't sell."
The SEC alleges that Cuban sold his 600,000 shares, or 6.3 percent stake in the company, before the announcement of the private offering.
CBS 11 News emailed Mark Cuban for comment about the appeal and received this response from his lawyer Steve Best - "
The Chief Judge of the District Court in which the SEC chose to file its case against Mr. Cuban dismissed the complaint based on the SEC's own version of the facts and, in the process, invalidated one of the SEC's insider trading rules. So not only did the SEC lose on the law, but, as Mr. Cuban's recent sanctions motion demonstrates, the SEC could never have won on the actual facts. This appeal is nothing more than the SEC's desperate attempt to shock a heartbeat into a case that was dead on arrival.. Its just one more example of wasting taxpayer money."
The 51-year-old Cuban is a technology entrepreneur who sold his Broadcast.com to Yahoo Inc. in 1999 at the height of the dot-com boom. He bought the Mavericks in 2000.
Cuban runs a Web site called Sharesleuth.com, which bills itself as providing "independent Web-based reporting aimed at exposing securities fraud and corporate chicanery." A companion site, BailoutSleuth.com, tracks the government's $700 billion financial rescue plan.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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