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May 26, 2009 5:13 pm US/Central
Mark Cuban Attends Insider Trading Hearing
Dallas Mavericks Owner Seeks Dismissal Of SEC Lawsuit
Reporting
Jack Fink
DALLAS (CBS 11 / TXA 21) ―
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Dallas Mavericks owner Mark Cuban reacts to a call during the game against the Denver Nuggets during Game Four of the Western Conference Semifinals during the 2009 NBA Playoffs at the American Airlines Center on May 11, 2009 in Dallas, Texas.
Garrett W. Ellwood/NBAE/Getty Images
On his way in and out of federal court Tuesday, Dallas Mavericks owner Mark Cuban only wanted to talk about the suit he was wearing, not the suit he's fighting.
"I think my suit looks nice," Cuban said.
Cuban was in court today because the federal government has accused him of insider trading. In its civil lawsuit, SEC officials say in June, 2004, the CEO of Canadian search engine Mamma.com called Cuban with confidential information that the company planned to issue a stock offering the next day.
The SEC said Cuban agreed to keep that information confidential.
The agency then claims Cuban became angry because his shares would have been diluted in value, and told Mamma.com's CEO, "Well, now I'm screwed. I can't sell."
But the SEC said Cuban did sell all of his shares the next day before the stock offering and avoided a $750,000 loss.
Tuesday morning Cuban's attorney, Paul Coggins, told CBS 11 News it was doubtful his client would attend the federal court hearing. Cuban was not required to appear. He showed up anyway, although he did not testify. Instead he sat in the front row of the court gallery and listened to his legal team make arguments before the judge.
Attorneys for Cuban and the SEC were each allotted 30 minutes to make their case before U.S. District Judge Sidney A. Fitzwater. The judge heard arguments but did not rule in the case.
Former U.S. Attorney Richard Roper said it appears neither side has a legal slam dunk. "The SEC has made a strong case, but on the other hand, Mr. Cuban's lawyers have made an equally strong case."
In court documents, Cuban's attorneys say Cuban vigorously disputes the SEC's claim that he entered into a confidentiality agreement with Mamma.com.
Roper said Cuban's attorneys believe that even if Cuban did agree to keep the stock offering confidential, Cuban didn't have a position of trust in Mamma.com. Roper said Cuban's attorneys believe their client "wasn't under an obligation, a confidential relationship in that phone conversation with the chairman of this company, and had no obligation, no duty to keep that information secret and not trade."
Cuban didn't reply to a CBS 11 News email seeking comment.
Besides his attorneys, Cuban has support from five law professors, including ones from SMU, Harvard, Yale and other law schools.
They believe the SEC is wrong.
The government disagrees.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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