Cuban Waves Off SEC Allegations
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The response, posted on Cuban's blogmaverick.com, disputes a U.S. Securities and Exchange Commission charge that he acted on nonpublic information to avoid more than $750,000 in losses when he sold his stake in Canadian Internet search engine Mamma.com.
Cuban's legal team, writing on his behalf on his Web site, cited an excerpt from an interview it conducted with Mamma's former chief executive, Guy Faure, as evidence that Cuban had not agreed to any confidentiality arrangement.
"There was no agreement to keep information confidential ... The SEC knows this -- they have the transcript, yet they brought the case anyway," the post read. "Why? Do they have a different statement from Mr. Faure?"
Dewey & LeBoeuf attorney Stephen Best, representing Cuban, did not return a telephone call seeking comment.
The SEC complaint said that in 2004 Faure called Cuban to tell him he had confidential information to share, and that Cuban, owner of the Dallas Mavericks basketball team and an Internet and media entrepreneur, agreed to hear it in secrecy.
The information was about a stock offering in Mamma, now known as Copernic, that Cuban learned would dilute the holdings of existing shareholders and be sold at a discount to the market price.
According to the SEC, Cuban told Faure, "Well, now I'm screwed. I can't sell," and later told his broker to sell anyway. The SEC's complaint said Cuban sold 10,000 of 600,000 shares in after-hours trading on June 28, 2004, and sold the rest the following day.
After markets closed that day, Mamma announced its private placement offering. The next day, the stock fell 9.3 percent.
Cuban, one of the 400 richest Americans with a net worth of $2.6 billion according to Forbes magazine, plans to fight the SEC charge. He is the highest-profile U.S. figure to be named in such circumstances since lifestyle and home decor guru Martha Stewart.