After “refusing to be bullied” into settlement, Mark Cuban, the billionaire owner of the Dallas Mavericks, won over a Texas jury and was cleared of insider trading charges brought by the SEC. The nine-person jury in the federal court in Dallas determined that Cuban did not violate federal securities laws in selling his stake in Mamma.com in 2004. Cuban was accused of using material, non-public information in deciding to sell his Mamma.com shares, avoiding a $750,000 loss.
The trial centered around a conversation between Cuban and then-CEO of Mamma, Guy Faure, in which Faure informed Cuban of an upcoming equity transaction that would dilute Cuban’s ownership stake in the company. Testimony at the trial boiled down to comparing Faure’s and Cuban’s accounts of their conversation. In the end, the SEC failed to convince the jury, among other elements of insider trading, that Cuban promised to keep the information confidential or that the information was not already in the public domain.
It is a big win for Cuban, who chose to take the SEC to trial over negotiating a settlement. Cuban was pleased with the outcome, but said “it’s not like winning a [Mavericks] championship.” A spokesman for the SEC, John Nester, said the agency will “respect the jury’s decision,” but it “will not deter us from bringing and trying cases where we believe defendants have violated the federal securities laws.”