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SEC Charges Cuban With Insider Trading

The Securities and Exchange Commission on Monday charged media mogul Mark Cuban with insider trading. The government agency alleges that the Dallas Mavericks owner and HDNet founder shorted his stake Internet company Mamma.com after hearing confidential information in June 2004. In the SEC complaint, a witness claims that Cuban quickly shorted his 6% stake in Mamma.com after being alerted about a proposed private offering of the company's shares, a move that would have diluted its stock price. After Mamma.com's CEO emailed Cuban asking him to call as soon as possible, Cuban reportedly said, "Well, now I'm screwed."

The next day, Cuban had sold his entire stake in the company before Mamma.com shares started plunging. Cuban, for his part, strongly denies the allegations. His lawyer, Christopher Clark, told The Wall Street Journal: "We're shocked. We find it incredible that given all the important issues that the SEC has to address with regard to today's economy they've sought to bring a $750,000 case relating to a he-said, she-said about one trade against a person whose integrity has never been questioned before with regard to the securities markets."

According to the complaint, Mamma.com, now called Copernic, sought to raise money through a financing instrument called a private investment in public equity in June 2004. The company's CEO called Cuban to gauge his interest in taking part. The SEC claims the CEO told Cuban that he would have to keep the information confidential, but Cuban's lawyers claim he was never given this information, nor was he asked to sign a confidentiality agreement. An internal email seems to back the SEC's contention.

Read the whole story at The Wall Street Journal »

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