Mark Cuban, the billionaire owner of the Dallas Mavericks basketball team, appeared at the U.S. Securities and Exchange Commission today to face questions related to the agency’s insider-trading lawsuit against him.
Cuban, 53, has been fighting for more than three years against SEC claims that he traded on confidential information when he sold his stake in Mamma.com, a Canadian Internet search company now known as Copernic Inc., just before it announced a private placement of shares. He arrived at the SEC’s offices in Fort Worth, Texas, at 8:45 a.m. with his attorney Stephen Best following a Jan. 13 court order to appear for the deposition.
In a 2008 lawsuit, the SEC claimed Guy Faure, then chief executive officer of Mamma.com, told Cuban in a 2004 phone call about plans for a private share offering. Cuban sold shares ahead of the deal, avoiding $750,000 in losses after the offering diluted his holdings, the SEC said.
The agency claims that Cuban agreed with Faure at the beginning of their call to keep the information confidential and told the CEO after learning details of the plan, “Well, now I’m screwed. I can’t sell.”
U.S. District Judge Sidney Fitzwater threw out the case in July 2009, ruling that Cuban didn’t agree not to trade on the information, only to keep it confidential.
The U.S. Court of Appeals in New Orleans overturned Fitzwater’s decision, finding the SEC’s allegations “provide more than a plausible basis to find that the understanding between the CEO and Cuban was that he was not to trade.”
Cuban has accused the SEC staff of engaging in “egregious acts of misconduct” in their probe of his trades. The SEC’s inspector general investigated Cuban’s allegations and issued a report last year saying they were unfounded.
When asked today how long the questioning would last, Cuban smiled and said, “23 days, it’ll be 23 days.” He and Best declined to comment further on the deposition.
The case is Securities and Exchange Commission v. Cuban, 08-cv-2050, U.S. District Court, Northern District of Texas (Dallas).
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