SEC Charges Mark Cuban With Insider Trading

HDNet Chairman Says Case Has 'No Merit'

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WASHINGTON ( -- The Securities and Exchange Commission today charged Mark Cuban with insider trading, accusing him of selling 600,000 shares of internet-search firm in 2004 based on inside information.
Mark Cuban
Mark Cuban Credit: Reuters

Besides owning the Dallas Mavericks pro basketbal team, Mr. Cuban is chairman of HDNet, a cable network featuring HD offerings.

The SEC complaint, filed in federal court in Texas, charges that Mr. Cuban avoided losses in excess of $750,000 by selling stock in knowing that the company was going to have a public offering that was likely to dilute the value of existing stock.

SEC may follow up
In a news release, the SEC said the complaint demonstrated it was willing to follow up insider-training allegations. "Insider-trading cases are a high priority for the Commission. This case demonstrates yet again that the Commission will aggressively pursue illegal insider trading whenever it occurs," said Linda Chatman Thomsen, director of the SEC's division of enforcement.

In a statement Mr. Cuban said the case had "no merit" and called it "a gross abuse of prosecutorial discretion." He said that he intended to vigorously contest the allegations and demonstrate the claims were "infected by the misconduct" of the enforcement division's staff.

"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," he said.
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