Posts Tagged ‘SEC

17
Nov
08

Mark Cuban Gets Busted *(UPDATED)*

Maverick Mavericks owner Mark Cuban has been charged with insider trading by the Security and Exchanges Commission for allegedly selling shares in the website company “mamma.com” after learning it was raising private money. The move ended up saving approximately $750k for the man worth about $2.8 billion. From the Wall Street Journal who broke this story:

The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.

In a PIPE transaction new shares are issued at a discount to the current trading price. An announcement of a PIPE transaction is often followed by a drop in the stock price as shareholders anticipate their stake will be diluted.

Cuban, who was already a super long shot to become the next owner of the Chicago Cubs can likely expect that this will completely take him out of the running. Which is a shame because he’s probably the only likely buyer who could get Chicago a championship before the end of the world.

Unfortunately, Cuban was unable to use his insider trading acumen to avoid getting hosed on that Jason Kidd trade last season…

UPDATE:

Mark Cuban, on his personal blog released this statement through his attorney:

“I wish I could say more, but I will have to leave it to this, and let the judicial process do its job…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.”




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