Written by Joanna Schoen
Edited by Sarah Mejia
On Oct. 16, 2013, Mark Cuban, Texas billionaire and owner of the Dallas Mavericks, was cleared in an insider trading case. The SEC filed a case in 2008, claiming Mr. Cuban received inside nonpublic information from the former chief executive of Mamma.com in 2004. Shortly after receiving this information Cuban sold his entire six percent stake in Mamma.com avoiding $750,000 in losses. The share price dropped a day after Cuban sold his entire stake. The SEC says the chief executive of Mamma.com, Guy Faure, told Cuban the inside information was confidential and that Cuban acknowledged the confidentiality and would not sell. However, Cuban says he did not agree or promise to keep this information confidential.
Insider trading is illegal. When a person trades their stocks after they have gained information about a company that has not yet been released to the public and other investors, they have broken the law. Trading on this confidential information gives the person an unfair advantage in the marketplace. The reason why the SEC filed a case against Cuban is because they claimed he traded even though he knew that the information was confidential and not yet released to the public.
Martha Stewart, in 2001, was also charged for insider trading. She received a tip that the company ImClone’s stock price was about to drop because the FDA did not approve their drug Erbitux. She received this tip and sold her 4000 shares before the news was made public. Martha Stewart ended up settling with the SEC and gave them $195,000 for the insider trading charges. The difference between these two situations is that Martha Stewart settled with the SEC and Cuban fought against them and won.
Since Cuban was victorious in the insider trading case it resulted in some setbacks in the SEC’s mission to enforce a tougher stance. Mr. Cuban says, “I’m glad I’m able to be the person who can afford to stand up to the SEC.” This precedent might help more people to stand up to the SEC instead of settling. After winning the trial Mr. Cuban wanted to embarrass the SEC agency in the media by posting insulting remarks on his blog regarding the trial. He also accused the SEC head lawyer of lying to the jury and he released insults towards the SEC on social media.
Cuban has a history of losing his temper with the National Basketball Association. Since he is the owner of the Dallas Mavericks, he has had a hard time controlling himself during the games to the refs, officials, and players on other teams. He has received numerous amounts of fines for his actions. This behavior is displayed again when Cuban badmouthed, embarrassed, and accused the SEC in the media after the trial.
I think Cuban’s behavior is very distasteful. Even though he does feel the SEC has been bullying him and interfering with his personal life, keeping comments to himself about the SEC would help him avoid consequences in the future. Future consequences might be having more fines to pay, but more importantly his reputation with the public and with the SEC. Defense attorney Stuart Slotnick, says, “Mark Cuban has a First Amendment right to voice his opinions, however, institutions have long memories and if a Mark Cuban issue were to ever arise before the SEC again, they will likely take a good look at it.” Although Mark Cuban has defeated the SEC this time, his outspoken behavior might cause him consequences in the long run.
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Carreyrou, John. “At Insider Trial, Mark Cuban Is Both Feisty and Friendly.” Wall Street Journal 8 Oct. 2013: n. pag. Wall Street Journal. 8 Oct. 2013. Web. 12 Nov. 2013.
Carreyrou, John. “Cuban Takes the Fight Outside.” Wall Street Journal 21 Oct. 2013: n.pag. Wall Street Journal. 21 Oct. 2013. Web. 12 Nov. 2013.
Carreyrou, John. “Mark Cuban Cleared in Insider-Trading Case.” Wall Street Journal 16 Oct. 2013: n pag. Wall Street Journal. 16 Oct. 2013. Web. 12 Nov. 2013.
Koppel, Nathan. “Cuban Insider-Trading Trial Gets Under Way.” Wall Street Journal 1 Oct. 2013: n. pag. Wall Street Journal. 1 Oct. 2013. Web. 12 Nov. 2013.