The owner of the NBA’s Dallas Mavericks, Mark Cuban, now has another court to be worried about.
The Securities and Exchange Commission charged Cuban, 50, with insider trading today. The SEC filed a complaint in the U.S. District Court for the Northern District of Texas, alleging that in June of 2004 Cuban called his broker and told him to sell all 600,000 of his shares of stock in Mamma.com, an Internet search engine company, after he allegedly knew the stock price would become diluted before the company announced it was issuing more shares. The agency estimates Cuban avoided more than $750,000 in losses.
Cuban is being represented by Dewey & LeBoeuf’s Ralph Ferrara, who is based in Washington, D.C. Cuban, who maintains a blog, posted a statement earlier today from his lawyer that says, “This matter, which has been pending before the Commission for nearly two years, has no merit and is a product of gross abuse of prosecutorial discretion. Mr. Cuban intends to contest the allegations and to demonstrate that the Commission’s claims are infected by the misconduct of the staff of its Enforcement Division.”
Cuban writes, “I wish I could say more, but I will have to leave it to this, and let the judicial process do its job.”
The deputy director of the SEC’s Division of Enforcement, Scott Friestad, told Legal Times that the division had been investigating Cuban since early 2007. Friestad declined to say specifically what had triggered the investigation, but says they learned about Cuban’s “trading issues through normal investigative work.” Friestad says the agency will pursue these charges aggressively and Cuban’s celebrity status will have no impact “whatsoever.”
Cuban, who purchased a majority stake in the Mavericks in 2000 after making billions through the sale of Broadcast.com to Yahoo, is anything but the typical sports-franchise owner. Rather than sitting in an owner’s box suite in a suit, Cuban is often seen donning Mavericks apparel and jeans among the fans at games. He has also been the subject of several league-wide controversies involving public criticism of the league and its officials and openly criticizing opposing players.