Home' Trinidad and Tobago Guardian : October 3rd 2013 Contents OCTOBER 2013 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
NEWS | BG17
Mark Cuban, billionaire owner of the Dallas
Mavericks basketball team, goes to trial over
regulators claims he engaged in insider trading
when he sold his stake in a Canadian Internet
search company nine years ago.
The US Securities and Exchange Commission
in 2008 accused Cuban of acting on confidential
information when he unloaded his 600,000
shares of Mamma.com four years earlier, just
before it announced a private placement of shares.
The case was revived in 2010 after US District
Judge Sidney A Fitzwater in Dallas dismissed it.
Fitzwater came close to throwing it out again
in March. Jury selection started today with a
pool of 64 prospective jurors. The trial will prob-
ably last eight to ten days, the parties have told
Cuban, 55, maintains he did nothing wrong.
"I am excited about this, to finally come to
court," Cuban said on September 30 before
entering the courthouse. "I won t be bullied.
That s the key element."
Fitzwater said on September 30 he intended
the jury to start deliberating by October 17. That
schedule may be affected by a federal government
shutdown due to the congressional spending bill
impasse between Republicans and Democrats,
the judge said.
Parts of the government may be forced to
suspend operations at midnight tonight if the
dispute isn t resolved before then.
"The government shutdown will not affect
the trial of this case for at least two weeks,"
said Fitzwater, who has allotted four days for
it this week and three next week. The judge
said he will revisit the issue later in the pro-
Cuban s lawyers said in court papers that
the SEC accused their client of misappropriating
confidential company information for his per-
sonal use in selling Mamma.com securities.
"The record shows that nothing could be
further from the truth," the attorneys wrote.
Cuban, chairman of the high-definition tel-
evision network HDNet, has owned the Mav-
ericks since 2000.
The National Basketball Association fran-
chise, which identifies him as "head honcho"
on its Web site, won the league championship
in 2011, beating the Miami Heat four games
to two. He also owns the Landmark Theatres
chain, has been a contestant on the television
programme, Dancing with the Stars, and
appears regularly on the TV show Shark Tank.
In 1999, he sold Broadcast.com, a multimedia
web service he founded, to Yahoo! Inc for
Cuban was the biggest stockholder of Mon-
treal-based Mamma.com, holding 6.3 per cent
of its shares, and had offered to use his fame
to promote the company and assist it with
possible acquisitions, according to a September
25 pretrial filing by Fitzwater summarising each
side s claims.
The SEC claims that in April 2004, one
month after he bought 600,000 shares of
Mamma.com stock, Cuban told then-chief
executive officer Guy Faure, "Obviously, what
you tell me is confidential," according to Fitzwa-
ter.In a June 2004 phone conversation, Faure
allegedly told Cuban he had confidential infor-
mation for him and asked if he was interested
in participating in a new offering that diluted
the company s shares by 8.5 per cent, the judge
wrote. Near the end of the conversation, Cuban
allegedly told Faure, "Now I m screwed. I can t
That day, one minute after ending a phone
conversation with a sales agent for the share
offer, Cuban called his broker and told him to
sell all his shares, according to the summary.
The next day, before the placement was
made public at the market close, Cuban s bro-
ker sold all the shares enabling Cuban to avoid
a US$750,000 loss, according to the SEC.
Mamma.com fell 8.5 per cent on June 30,
2004, the first trading day after the private
placement was announced, and 15 per cent
the day after the investor s sales were disclosed
in a regulatory filing made public on July 2,
according to data compiled by Bloomberg.
The company is now known as Copernic
Cuban contends the SEC can t prove a con-
fidentiality agreement was formed between
him and Mamma.com and says he made no
agreement that he couldn t trade on infor-
mation about the private share offering, Fitzwa-
Cuban s lawyers have said the commission s
proof falls short in several other areas, including
whether he was reckless, whether he disclosed
he was going to sell his stock and whether he
used the offering information to sell, according
to the summary statement.
"We look forward to a fair trial," Chris Clark,
one of Cuban s attorneys, said in an interview.
"We think the truth will come out and Mr
Cuban will be vindicated."
"The thing I am really looking forward to
is shedding some sunlight on how the SEC
really works," Cuban said today on arriving at
Judy Burns, a spokeswoman for the SEC,
declined to comment on the trial.
The government asked for "disgorgement
of all ill-gotten gains" and undisclosed civil
monetary penalties, prejudgment interest and
a permanent order prohibiting Cuban from
"further violations of the relevant provisions
of the Exchange Act."
The case has stretched to five years with
disputes over insider trading law, SEC conduct
and other matters. After the judge dismissed
the case in 2009, a US appeals court in New
Orleans reversed that ruling and revived it.
In March, Cuban lost another bid to end
the case. Fitzwater stated that while his ruling
was "a close one," the SEC was entitled to
present its case to a jury.
Billionaire Cuban goes to trial in SEC insider lawsuit
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