After battling in court with the US government for more than five years, billionaire Mark Cuban was cleared on Wednesday by a Texas jury of using a private tip to avoid a big loss on his 2004 sale of Internet company shares, reported Jana Pruet of Reuters.
The report stated that the owner of the Dallas Mavericks basketball team had been accused of insider trading on non-public information after he sold his 600,000 shares in the Internet search company Mamma.com. Cuban avoided a $750,000 loss.
According to a report by Bryon Achohido of USA Today, Cuban originally rose to prominence in 1999 when he sold Broadcast.com to Yahoo Inc. for $5.7 billion. He stars on a television show Shark Tank where financiers analyze recent products for investors and was once a celebrity contestant on Dancing With The Stars. Mid-trial in 2011, Cuban’s Mavericks won the NBA Championship.
The U.S. Securities and Exchange Commission brought a Civil Law Suit against Cuban in November 2008. A judge dismissed the suit in 2009, but an appeals court revived the case the following year.
Cuban immediately took the case to trial. According to Pruet's report, Cuban stated he spent more on lawyers than it would have cost to settle the case. He also referred to the situation as "personal."
"It's personal," Cuban said. "You take all these years of my life, it's personal."
Prosecutors argued that Cuban sold his shares after learning that a private placement in the company would dilute his holdings. Pruet reported that the shares dropped 9.3 percent after Mamma.com’s offering was announced and Cuban did not suffer any deficit. According to the report, Cuban argued that the private placement and the websites possible association with a stock swindler were both reasons for selling the shares.
After the case, the Security and Exchange Commission issued a statement on the verdict, courtesy of Achohido.
John Nester, an SEC spokesman, issued an e-mailed statement: "While the verdict in this particular case is not the one we sought, it will not deter us from bringing and trying cases where we believe defendants have violated the federal securities laws."
The decision brings a blow to the SEC, especially after it won a significant case against former Goldman Sachs vice president Fabrice Tourre this summer. Tourre was found liable on six of seven counts of committing fraud during a failed mortgage securities deal during the 2008 and 2009.