The SEC’s five year old insider trading case against Dallas Mavericks owner, Mark Cuban, will continue. In March 2013, a Federal District Court judge in Dallas1 denied a request by Mr. Cuban to dismiss the SEC’s insider-trading lawsuit, originally filed in 2008. The SEC complaint accused Mr. Cuban of insider trading in the securities of Mamma.com, a publicly traded Internet search engine company. According to the complaint, in June 2004, Mr. Cuban sold his entire 600,000 share position in Mamma.com after learning from the CEO that the company was planning to conduct a PIPE offering. The complaint alleged that Cuban avoided losses in excess of $750,000 by selling his stock prior to the public announcement of the PIPE offering.
The judge, in denying Mr. Cuban’s motion, termed the question as to whether Mr. Cuban is entitled to summary judgment “a close one,” but found that the SEC will be entitled to present its case to the jury on the following issues:
- Did Mr. Cuban at least implicitly agree to keep the information confidential?
- Did Mr. Cuban at least implicitly agree not to trade on the PIPE information?•
- Did Mr. Cuban disclose his intention to trade on the nonpublic PIPE information, thereby foreclosing liability under the misappropriation theory?
- Was the PIPE information confidential?•
- Was the PIPE information material?