There Might Be a Political Reason for Insider Trading Claims Against Mark Cuban

In a shot across the bow, Mark Cuban, owner of the NBA team, the Dallas Mavericks lashed out at the SEC after it filed a civil complaint against him today for engaging in insider trading. Read about the charges here.

From Mark Cuban's personal blog: blogmaverick.com:

"I am disappointed that the Commission chose to bring this case based upon its Enforcement staff's win-at-any-cost ambitions. The staff's process was result-oriented, facts be damned. The government's claims are false and they will be proven to be so. The Commission's claims are infected by the misconduct of the staff of its Enforcement Division."

OK, let the games begin. Cuban has been fighting with the SEC for more than two years as he sought to keep them from charging him with insider trading. He is as furious about this as he generally is about the Mavericks losing.

It is rare for a defendant in a government case to be this vituperative. A denial is expected, but an accusation of federal misconduct is pretty rare since the average person accused (but this is Mark Cuban, remember?) doesn't want to get the government more angry than it is. It just might wipe away any chance of a favorable deal.

Later in the day the complaint was filed and after Mr. Cuban posted his rebuttal, an item appeared on a New York Times blog that makes me understand why Mr. Cuban seems to be throwing caution to the wind and making his accusation. In what the Times characterized as a "purported email" from an SEC staffer to Mr. Cuban, it is revealed that there was bad blood between the agency and Cuban not just as a result of the accusations about his sale of stock in mamma.com. Cuban is taken to task for his financial backing of the series of documentaries entitled, "Loose Change." The films set forth a case for a conspiracy among individuals in the U.S. government to bring about the destruction of the World Trade Center towers on September 11, 2001.

The staffer sees Cuban's anger about the investigation as ironic since as the text printed by the Times says, a man who finances pie-in-the-sky conspiracy theories about President Bush has no right to complain about what he considers to be a witch hunt. And the emailer wonders how SEC Chairman Christopher Cox would feel about Cuban if he knew about his investment in the films. Wow. And we thought that the Sarah Palin "unpatriotic" claims about President-elect Obama were only made in the heat of the campaign battle.

Comments

[RobinSeattle]

That email from the government attorney should be enough to have this case thrown out. Of course, this is the Bush Justice Department that helped get Don Siegelman thrown in jail for nothing, so it will go on and make a further farce of our justice system.

Not that I have any sympathy for Cuban. Anyone who would finance a conspiracy film like that is a nutter. Probably now a good thing that MLB isn't going to let him have the Cubs.

[Javani]

"doesn't want to get the government more angry than it is"

I don't think Mark Cuban is wary of making people angry at himself. He seems to feed off doing just that.

[larry278]

The lords of MLB really don't want Mark Cuban to buy the Cubs. If Cuban buys the Cubs-they stay in Chicago. If the Cubs don't get moved to Japan-no one in Japan will buy the Reds or the Pirates. The MLB deal is the Cubs, Reds & Pirates move to Japan; MLB will give Chicago, Cincinasty & Pittsburgh expansion teams & train loads of hush money to seal the deal. MLB hasn't figured where to put the 3 AL expansion teams yet. But Mark Cuban won't be allowed to bid on any MLB team, expansion or established. Now the Sox move to a domed stadium in Northern Indiana, Right? Sam Zell will handle the real estate, sale of empty parks in Chicago, S Oh, SW Pa, buying N In land, building N In domed stadium. Mr Zell is also willing to help the Japanese, for a price.
The SEC actions agains Mr Cuban are a bit more complex than preventing Mark Cuban from buying the Cubs. The lords of MLB are about money, not just 2 bit revenge against Mark Cuban.

[RobinSeattle]

Now THAT was a wacky comment. Lyndon LaRouche will be phoning you for tips on how you did it.

[Witkacy]

Cuban also produced Brian dePalma's "Redacted"

[Danny]

That was my first reaction (the headline).

[Quipman]

It appears that someone is tying to throw road blocks. Road blocks or not I believe that supporters of Mr. Obama will expect nothing short of prosecutions when the truth finally gets out about the Bush administration's wrong doings from torture to wall street. It's because the public went along with the pardon of Nixon that the nation has had to put up with the type of GOP politics including this chump change prosecution of Mr. Cuban. As we use to say in the hood," Don't believe the hype"!

[3dogman]

Charge, have a trial, and convict Mark Cuban. People who cheat the system to gain money in the stock market cost all the other market players money. The problem is that the prosecution of cheaters is so selective and random it does not deter cheating. It cost you and me billions if not trillions in lost stock value.

Yesterday I was piss_d when I first read about Mark Cuban. Today's story is as conspiritorial as Cuban's film "Loose Change". Congress spent 45 million investigating Clinton's relationship with Monica, but only 11 million investigating 9-11 and President Bush was afraid to testify himself and would only testify while holding hands with Dick Cheney.

Honest people have doubt because Bush's government never fully answered the questions that would have put 9-11 to rest. What a mess. I hope that someday there is an honest investigation into 9-11 and those found complicit prosecuted fully, even if it is our own government.

[ElBruce]

From the previous reports, Cuban sold his shares in Mamma.com on June 29th. He stated that his reason for doing so was that they were seeking a PIPE deal (whatever that is) which would have diluted his shares. Mamma.com announced publicly that they were seeking the PIPE deal on June 29th.

Now maybe Cuban knew they were going to do it beforehand, made up his mind to sell beforehand, and was sitting there on June 29th with his finger on the "enter" key waiting for the press release to drop. Even so, that's not insider trading. From what I can tell so far, he didn't move the shares until the information was public.

[copernikus]

PIPE = Private Investment in Public Equity

It's where a company sells stock to private investors instead of going to the public markets and doing a secondary offering. It avoids the need to file with the SEC before the offering.

[ThoughtAboutIt]

If a company contacts you to ask if you want to actively participate in diluting the equity of a stock you already own you (of course) have the option to unload your existing shares. Any saavy investor would consider that option under those circumstances.

There must be more details that the SEC has not disclosed because I haven't heard anything that would make me conclude Cuban is guilty of anything but being an experienced investor.

[copernikus]

"If a company contacts you to ask if you want to actively participate in diluting the equity of a stock you already own you (of course) have the option to unload your existing shares. Any saavy investor would consider that option under those circumstances. "

Not true. The bankers that run these deals are very careful about informing investors they talk to about a PIPE that once they are told the name of the company, they are restricted by law from trading in the shares. Savvy investors know that to do so isn't savvy, it's criminal.

However, ELBruce's post is the key: if Cuban sold after the compnay made their intentions public, then he's off the hook.

[OrangeBananas]

I doubt it. The fact that Cuban promoted a 9/11 conspiracy theory movie is probably only a coincidence.

Some may ask why Cuban would risk so much for only a couple hundred grand. I don't know, but so did Martha Stewart and she wasn't promoting conspiracy theories.

So with that written, if you are a high profile person who is accusing the government of conspiracy you had better make sure you are squeaky clean. Because if there is something they can nail you on to discredit you, they will.

Cuban is and always has been a hot head, the fact that he is playing an angry victim doesn't surprise me and shouldn't surprise anyone. Cuba is innocent until proven guilty and deserves fair treatment. But let's not jump to conclusions that the government framing this guy just yet.

[jhNY]

Duly noted. You doubt it. The fact that this government has ruthlessly pursued its critics remains a coincidence of no standing for you. Hope, in the event of such an emergency, you don't wait to be persuaded your house is on fire until you hear the sirens, as by then, though the evidence of conflagration would indeed be persuasive, it would probably be too late to get out without being at least badly singed.

[GranE]

No one believed Hillary when she said there is a right-wing conspiracy trying to take over. Anybody believe her yet? If the SEC is looking for someone to make an example of why not turn to Wall Street? Some guts, this bunch.

[ethancorso]

Every American should see Loose Change. Some of the claims made in the film are dubious at best, but it successfully makes the case that the official story of what happened that day is almost entirely a lie.

[Badbone]

Absolutley political. No doubt about it.

Yes, he is guilty as sin. Yes, he clearly made money using knowledge not available to the public via a personal phone call. And yes, he obviously broke the law. All that is clear. But one thing isn't clear. The one thing that changes everything.

He's one of our guys. We like him. He's one of us. On this side of the political isle.

Therefore his prosecution is blatantly political.

[nowarpleez]

This is political. Just like Martha Stewart's going to prison for supposedly telling a lie was political. Just like outing a CIA agent was political. Nothing new here; I hope he fights to the death.

[StuartJoshua]

hmm, maybe it's his name they dont like: they probably think he is a socialist

[StuartJoshua]

Notice how it's taking over a year to get federal charges to stick to barry bonds? Cuban should not fear this Justice Department. It used to be the case where if federal charges were brought, they had you...you were gonna be found guilty. Under bush, the justice department was staffed with idealogical cronies. It is decimated and weak and pathetic. No longer is it the case where if they want you, they got you. This is another example of how bush has weakened and even torn down once-great institutions.