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11|17|2008 08:26 pm EDT

Mark Cuban charged with Insider Trading

by Frank Michlick in Categories: Up to the Minute

The SEC has charged Mark Cuban with Insider Trading over the sale of 600,000 Mamma.com shares in June 2004. Mark Cuban, owner of the Dallas Mavericks owned stakes in registrars Tucows and Register.com.

The Commission’s complaint, filed in the U.S. District Court for the Northern District of Texas, alleges that in June 2004, Mamma.com Inc. invited Cuban to participate in the stock offering after he agreed to keep the information confidential. The complaint further alleges that Cuban knew that the offering would be conducted at a discount to the prevailing market price and that it would be dilutive to existing shareholders.

Within hours of receiving this information, according to the complaint, Cuban called his broker and instructed him to sell Cuban’s entire position in the company. When the offering was publicly announced, Mamma.com’s stock price opened at $11.89, down $1.215 or 9.3 percent from the prior day’s closing price of $13.105. According to the complaint, Cuban avoided losses in excess of $750,000 by selling his stock prior to the public announcement of the offering.

In a response on his blog, Mark Cuban says:

“I am disappointed that the Commission chose to bring this case based upon its Enforcement staff’s win-at-any-cost ambitions. The staff’s process was result-oriented, facts be damned. The government’s claims are false and they will be proven to be so.”

[via PaidContent.org]

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