A federal judge has dismissed SEC insider trading charges against entreprenuer and Dallas Mavericks owner Mark Cuban over the way he dissolved his investment in search engine Mamma.com. The SEC has 30 days to file an amended complaint but given the bad publicity from this one — and the changes at the agency since the case was filed last November, it wouldn’t be surprising to see the case simply disappear. The AP first reported the Friday morning ruling (embedded below).
U.S. District Judge Sidney A. Fitzwater granted Cuban’s motion for dismissal, explaining in the 35-page ruling that even if everything the SEC alleged is true, it had failed to prove Cuban “undertook a duty, expressly or implicitly, not to trade on or otherwise use material, nonpublic information” about Mamma.com’s plans. The SEC’s allegations center on information on he was given about Mamma.com’s plans for a stock offering that would dilute equity. Cuban sold 600,000 shares in the company before the news went public, avoiding, the SEC claimed, losses of more than $750,000. (We detailed the charges when the suit was filed.)
Cuban fought the charges loudly, using his Blog Maverick and other avenues to dispute the claims that he was an insider in that situation; he also charged an SEC employee with using the case to pursue a personal vendetta.
Disclosure: We sometimes republish Cuban’s Blog Maverick posts here with his permission.