Mark Cuban Charged With Insider Trading
from the before-or-after-the-news-is-public dept
However, the SEC is now claiming that some of Cuban's other stock moves weren't so cut and dried. It's charged Cuban with insider trading in his stake in meta-search engine Mamma.com. That story was a big deal four years ago. Towards the beginning of 2004, Cuban had to reveal publicly his 6.3% stake in the company (anything over 5% needs to be revealed), saying that he liked the company because in using its search engine he found that it worked well, and in investigating the company he realized that it was generating a fair amount of cash. However, just a few months later headlines were made again when the news came out that Cuban had sold his stake, noting that he was upset about the company's plan to raise money via a private placement, pointing out that such a transaction would dilute him. So, when he found out about it, he sold all his shares.
The problem, according to the SEC, is that he sold those shares after company insiders told him about the planned fundraising -- not after the company made that info public. If that's true, then it does sound like he would have been selling on material non-public information received from an insider, which would be bad news.