Mark Cuban: Fraud and The SEC

Dallas Mavericks owner and entrepreneur Mark Cuban was charged with insider trading on Monday November 17th 2008.

The SEC (Securities and Exchange Commission) states that Cuban was invited to purchase stock in 2004 from Mamma.com which was an upcoming search engine.

Some court documents state that Cuban agreed to keep some information private about the stock which informed him that Mamma.com was not going to do well during the first day of trading.

Cuban then was alleged to have his stock broker drop 600,000 shares that day which saved him from losing $750,000.

Mark Cuban says that the charges the SEC have filed against him are false and he plans to fight them.

Unfortunately, if Cuban is found guilty it might have some effects on his other aspirations.  

Mark Cuban has been venturing after the Chicago Cubs organization for quite some time now.  With this hanging over his shoulder, the Cubs’ will most likely not want to deal with Cuban and his potentially bad PR.

As for the Dallas Mavericks organization, I don’t think they will have much to worry about.

Since it is only a Civil case, if Cuban is found guilty, he will most likely be forced to pay a series of very substantial fines.  However, if he tries to fight it, he could then face a criminal investigation, which could possibly lead to jail time if he is found guilty.

Cuban is passionate and enthusiastic about his Dallas Mavericks club and everyone in the organization and around the Metroplex definitely knows that.

The SEC had another high profile case in 2004 that involved Martha Stewart and stock sales which led to her conviction and her serving five months in prison, paying around $195,000, and agreed not to work for a director of a public company for five years under a settlement in 2006