October 18, 2013 c.2013 New York Times News Service
The government mocked Mark Cuban as a winner in “his mind,” claiming the billionaire owner of the Dallas Mavericks basketball team possessed a “competitive edge” that drove him to insider trading.
But a jury Wednesday cleared him of wrongdoing, making Cuban a winner in the civil case and delivering a blow to the federal agency that he battled for five years.
The agency, the Securities and Exchange Commission, was hoping to build on the momentum it gained from the recent trial win against Fabrice Tourre, a former Goldman Sachs trader at the center of a failed mortgage deal.
Now the loss in the Cuban case could reignite concerns about the agency’s struggles in the courtroom, where some crucial cases from the financial crisis crumbled.
“We respect the jury’s decision,” John Nester, the agency’s spokesman, said in a statement. “While the verdict in this particular case is not the one we sought, it will not deter us from bringing and trying cases where we believe defendants have violated the federal securities laws.”
With a net worth pegged at $2.5 billion, Cuban’s battle was not about the money. Instead, he fought the case to clear his name and humble the agency that sued him.
“When you take all these years of my life and try to make a point, it’s personal,” Cuban declared at a news conference outside the courthouse in Dallas, adding, “It’s just wrong the way this went down.”
The agency’s case stems from Cuban’s decision in June 2004 to sell his 6.3 percent stake in search engine Mamma.com. He did so after learning from Mamma.com’s chief executive that the company was planning a private offering of its stock — a deal likely to hurt the stock price and dilute the holdings of existing shareholders like Cuban.
The SEC lawyer leading the case, Jan M. Folena, argued that Cuban agreed to keep the information confidential in a call with the firm’s chief, Guy Fauré.
In response to hearing that Fauré had “confidential information” to share, according to the SEC, Cuban replied, “Um hum, go ahead.” And at the end of the call, Cuban expressed frustration that “I can’t sell” the existing shares because he now had access to inside information.
And yet, Folena said, Cuban traded anyway, just hours before the information was made public. That move, she said, meant that Cuban avoided $750,000 in losses.