Reprinted with the permission of The Legal Intelligencer.

Since the jury found him not liable for insider trading in Securities and Exchange Commission v. Cuban, No. 09-10996, commentators have focused on many aspects of Mark Cuban’s defense. As is widely known, the U.S. Securities and Exchange Commission accused Cuban of trading stock in Mamma.com in 2004 based on material, nonpublic information. Specifically, the SEC claimed that, within 24 hours of receiving allegedly confidential information from then-CEO Guy Faure that the company planned a private investment in a public equity (PIPE) offering, Cuban sold 600,000 shares of his Mamma.com stock before the PIPE offering was made public, thereby avoiding a loss of $750,000. The lessons that may be drawn from his defense are, in some ways, very limited. For example, it is not often that the government’s key witness is beyond the subpoena power of the SEC and refuses to appear in person at trial, but Faure, a Canadian, did just that. Similarly, the SEC does not often bring insider trading cases where the defense is able to present substantial evidence that the information traded on was publicly available and therefore not confidential. But in Cuban’s case he was able to rely on documents filed with the SEC to demonstrate that the information he later learned was not confidential. ... 

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