The lawsuit accuses the outspoken billionaire of insider trading after he sold 600,000 shares in Mamma.com stock upon learning they would sell below their current market price. The SEC alleges Cuban used the confidential information to avoid losses in excess of $750,000.
Within hours of receiving the tip, according to the complaint, Cuban instructed his broker to sell his entire stake in the company. When the offering was publicly announced, Mamma.com’s stock price opened at $11.89, down $1.215 or 9.3 percent from the previous day’s closing price, according to the SEC.
“As we allege in the complaint, Mamma.com entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential,” said Scott W. Friestad, Deputy Director of the SEC’s Division of Enforcement. “Less than four hours later, Mr. Cuban betrayed that trust by placing an order to sell all of his shares. It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market.”
In a statement posted on the Dallas Mavericks owner’s blog, blogmaverick.com, attorney Ralph C. Ferrara said the 50-year-old Cuban planned to fight the suit.
“This matter, which has been pending before the Commission for nearly two years, has no merit and is a product of gross abuse of prosecutorial discretion,” Ferrara said. “Mr. Cuban intends to contest the allegations and to demonstrate that the Commission’s claims are infected by the misconduct of the staff of its Enforcement Division.”
Cuban has become a pivotal player in the mixed martial arts world since 2007, as his HDNet channel airs broadcasts for a number of promotions, including Strikeforce, Affliction, Maximum Fighting Championship, Dream and M-1 Global. He vowed to fight to clear his name.
“I am disappointed that the Commission chose to bring this case based upon its Enforcement staff’s win-at-any-cost ambitions,” Cuban said in a statement released on his blog. “The staff’s process was result-oriented, facts be damned. The government’s claims are false and they will be proven to be so.”
Cuban, who launched HDNet in September 2001, could also face criminal prosecution at some point.view original article >>
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