Mark Cuban, owner of the Dallas Mavericks NBA basketball team, has been charged with securities fraud by engaging in illegal insider trading, according to a complaint filed by the Securities and Exchange Commission today in federal court in Dallas.
As initially reported on the web site of the Wall Street Journal, wsj.com, the complaint says Cuban, 50, sold 600,000 shares of Mamma.com prior to the announcement of material nonpublic information to which Cuban had been made privy by Mamma.com’s CEO.
The alleged insider trading allowed Cuban to avoid $750,000 in losses, the complaint said.
The SEC complaint said Cuban spoke with the Mamma.com CEO for eight minutes and thirty-five seconds from the home of the Mavericks, the American Airlines Center, on June 28, 2004. During the call, Cuban acknowledged receipt of the inside information which was likely to cause a stock price drop, according to the complaint. Cuban told the CEO: “Well, now I’m screwed. I can’t sell,” the complaint said.
Nonetheless, Cuban sold 10,000 of the shares in after-hours trading on June 28, and the remaining 590,000 shares the next day, according to the complaint. The SEC is calling for Cuban to give up the $750,000 in avoided losses and to pay a civil penalty.