A federal judge has thrown out the SEC’s insider trading case against Mark Cuban, saying the SEC failed to prove that Cuban had any duty not to make stock trades based on the information he had received about a company called Mamma.com. The SEC has 30 days to re-file the case if it can come up with new legal arguments.
Cuban, who became a billionaire streaming radio stations on Broadcast.com and now owns such ventures as HD Net and the Dallas Mavericks basketball team, had been accused of using insider information to avoid over $750,000 in losses by selling his Mamma.com stock. Cuban had been incensed when the CEO of Mamma.com asked him to invest in an add-on stock issue which would dilute all existing shareholders and sold all of his shares before the offering was publicly announced.
But Judge Sidney Fitzwater ruled Friday that the SEC’s complaint failed to establish that Cuban took on a duty not to trade on the information he had received from the CEO. So, the judge has dismissed the case, but told the SEC it can re-file within 30 days if it can “allege that Cuban undertook a duty, expressly or implicitly, not to trade on or otherwise use material, nonpublic information” about the stock offering.
Cuban has been uncharacteristically silent about Friday’s victory in court. He had previously stated on his personal blog that he was saying little about the SEC case under advice from his attorneys. Perhaps he’ll be unleashed after the 30-day period passes.
