By: gmalcolms

gmalcolms — Fri, 21 Nov 2008 12:17:52 +0000

I work in the financial industry, am a CFA charterholder, and get tested up the wazoo on insider trading regulations on a regular basis (although now I get tested on Japanese ones). If the complaint against Cuban is anything close to the reality than this should be an open-and-shut case, unless everything I've been taught is wrong: He traded on material non-public information. A new stock offer is one of the standard categories of material information. He admitted in his own blog in 2004 that he sold the stock b/c he doesn't like PIPE offerings. It should be pretty easy to check that his trade occurred before the information had been publically disclosed and I'm sure the SEC has verified this before bringing the complaint (Cuban hasn't denied this either). Moreover, he received word of the issue in private from the CEO, who is the very definition of an insider. If an insider gives you material non-public information then you become an insider, too, which is why it would also be insider trading if the CEO told his brother-in-law and he traded on it. (He was also a major shareholder (6%), and in Japan that alone would've qualified him as an insider.) In short, every necessary component is there, Cuban hasn't disputed any of these particulars, and there is solid evidence for all of them. Whether Cuban made a profit, knew it was illegal, or promised he would keep the information confidential is irrelevant.

By: Justin Fox

Justin Fox — Fri, 21 Nov 2008 05:02:29 +0000

@markwolfinger: Ah, you're right. The memories come rushing back ...
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So I guess Mark Cuban should probably restrict himself to true statements for the next couple of months.

By: markwolfinger

markwolfinger — Fri, 21 Nov 2008 04:46:52 +0000

Martha Stewart lied during the investigation. That's the crime of which she was convicted. She was not on trial for insider trading.

Comments on: Mark Cuban not so ha ha ha

By: gmalcolms

By: Justin Fox

By: markwolfinger