SEC sues Dallas Mavericks' team owner

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By Ben Conery

Federal regulators Monday accused Mark Cuban, the flamboyant owner of the Dallas Mavericks professional basketball team, of insider trading, saying the billionaire media mogul used confidential information to avoid losing $750,000 worth of stock in an Internet company.

The Securities and Exchange Commission (SEC) filed a lawsuit against Mr. Cuban, 50, seeking unspecified civil penalties and restitution.

No criminal charges were filed against Mr. Cuban, who also owns HDNet, a national high-definition television network, and the national Landmark Theaters chain.

The Justice Department declined to comment on the case.

"I am disappointed that the commission chose to bring this case based upon its enforcement staff's win-at-any-cost ambitions," Mr. Cuban wrote in a posting on his blog, Blogmaverick.com. "The staff's process was result-oriented, facts be damned. The government's claims are false, and they will be proven to be so."

The lawsuit arises from a 2004 conversation between Mr. Cuban and the chief executive officer of Mamma.com Inc., an Internet-search engine of which Mr. Cuban was the largest known shareholder, according to the SEC.

During the conversation, the CEO confidentially invited Mr. Cuban to participate in a stock offering, which Mr. Cuban knew would be sold at a discount, according to the SEC.

"As we allege in the complaint, Mamma.com entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential," said Scott W. Friestad, deputy director of the SEC's enforcement division. "Less than four hours later, Mr. Cuban betrayed that trust by placing an order to sell all of his shares."

According to the SEC, Mamma.com's stock price dropped $1.22 after the offering was announced publicly. By selling his 600,000 shares, Mr. Cuban saved himself from losing $750,000.

"It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market," Mr. Friestad said.

One of the world's richest men, Mr. Cuban is a self-made billionaire and well-known for outbursts directed at NBA officials and the fines that followed. Those controversies and Mr. Cuban's visibility have led him to become a quasi-celebrity; he appeared last year on ABC's "Dancing with the Stars."