Nov. 17 (Bloomberg) -- Billionaire Mark Cuban, the owner of the Dallas Mavericks basketball team, was sued by U.S. regulators over claims he made illegal insider trades four years ago in shares of Internet search company Mamma.com Inc.

Cuban, 50, became ``very upset and angry'' in 2004 after the company told him in confidence it planned to sell stock below its trading price, the Securities and Exchange Commission said in a civil suit today at federal court in Dallas. Within four hours, he sold his 6.3 percent stake, avoiding more than $750,000 in losses after Mamma.com's sale was announced, the SEC said.

``It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market,'' Scott Friestad, the SEC enforcement official overseeing the case, said in a statement.

The SEC's complaint focuses on a series of phone calls and messages between Cuban, the company and his broker. Cuban, who in 2006 started the Web site sharesleuth.com aimed at exposing ``securities fraud and corporate chicanery,'' vowed in a statement to fight the SEC's allegations.

A statement on Cuban's blog said the SEC's claims stem from a ``gross abuse of prosecutorial discretion'' and ``are infected by the misconduct of the staff of its enforcement division.''

``I am disappointed that the commission chose to bring this case based upon its enforcement staff's win-at-any-cost ambitions,'' the statement quotes him as saying. ``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 agency's suit seeks to impose unspecified fines and confiscate gains from the trades.

Nine-Minute Call

Cuban was at the American Airlines Center in Dallas, home of the Mavericks, in late June 2004 when he got an e-mail from Mamma.com's chief executive officer, asking that he call as soon as possible, the SEC said. During an almost nine-minute call, Cuban promised to keep the information secret before learning the company planned a private investment in public equity offering, known as a PIPE.

``Cuban became very upset and angry during the conversation, and said, among other things, that he did not like PIPEs because they dilute the existing shareholders,'' driving down the value of their stock, the SEC wrote in its complaint. At the end of the call, Cuban told the CEO, ``Well, now I'm screwed. I can't sell,'' the SEC said.

Cuban's attorneys, Ralph Ferrara of Dewey & LeBoeuf LLP and Paul Coggins of Fish & Richardson LLP, didn't return calls.

Name Change

Montreal-based Mamma.com changed its name to Copernic Inc. in 2007, according to the SEC. Copernic Chief Executive Officer Marc Ferland also didn't return a call seeking comment.

Cuban is owner of the HDNet high-definition television channel and the Landmark Theater chain.

He is among initial bidders this year for Major League Baseball's Chicago Cubs, the team's Wrigley Field home and a stake in a TV network. Sam Zell's Tribune Co. is trying to sell the assets by year-end to help pay off $11.8 billion of debt. A deal requires MLB owners' approval.

The SEC's suit ``will put a cloud'' over whether Cuban will buy the team, said sports banker Robert Tilliss of Inner Circle Sports in New York, who isn't involved in the sale. ``This will definitely put some doubts in people's minds about him being an approvable bidder.''

Baseball spokesman Pat Courtney declined to immediately comment. Tribune spokesman Gary Weitman and Zell's spokeswoman Terry Holt declined to comment.

Broadcast.com

Cuban made his fortune through the sale of Broadcast.com, the multimedia Web service he co-founded and which Yahoo! Inc. bought for $4.7 billion in 1999.

The next year Cuban purchased the Mavericks from Ross Perot Jr. for $280 million, a record at the time for a National Basketball Association team. The Mavericks became a perennial championship contender under Cuban's control, ending a 10-year playoff drought in his first full season and reaching the NBA Finals in 2006.

Cuban, who often watches the Mavericks from courtside wearing a T-shirt and jeans, has racked up more than $1.3 million in fines for his criticism of basketball officials.

``We do not comment on matters such as these,'' said Maureen Coyle, an NBA spokeswoman.

To contact the reporter on this story: David Scheer in New York at dscheer@bloomberg.net.

Last Updated: November 17, 2008 14:51 EST