NBA Owner Cuban Accused Of Insider Trading
MELISSA BLOCK, host:
If you caught a glimpsed of Mark Cuban recently, he was probably sitting courtside at a Dallas Mavericks basketball game. He owns the team. Or maybe he was bounding across the stage on "Dancing With The Stars."
Well, Cuban, who made his fortune as an Internet entrepreneur, will be spending some time with his lawyers in the coming months. Today, the Securities and Exchange Commission charged him with insider trading. The SEC alleges that Cuban avoided a more than $750,000 loss by improperly selling shares in a company called mamma.com. NPR's Wade Goodwyn has details from Dallas.
WADE GOODWYN: Mark Cuban was already the largest shareholder in the Canadian internet search company back in 2004. In June of that year, CEO Guy Faure called Cuban and told him in confidence that the company needed more capital and was about to issue a new stock offering. ..TEXT: Mamma.com, which bills itself as the mother of all search engines, was struggling to compete against Google and Yahoo. According to the CEO, Cuban was angry at the news. He understood that the new offering meant his existing 600,000 shares would lose significant value.
According to the SEC, after talking to the company's investment banker for eight minutes, Cuban hung up and one minute later called his broker and sold every share of mamma.com he owned. John Coffee is a professor of law at Columbia University who specializes in, among other things, securities fraud.
Professor JOHN COFFEE (School of Law, Columbia University): In charging insider trading, the SEC is essentially alleging that Mr. Cuban breeched the duty he owed to this corporation not to trade on knowledge of their forthcoming public offering.
GOODWYN: Mark Cuban responded to the allegations on his web blog today, writing, quote, "I am disappointed that the SEC chose to bring this case based upon its staff's win-at-any-cost ambitions. The government's claims are false, and they will be proven to be so."
Since selling his company, broadcast.com, to Yahoo and banking more than two billion dollars, Cuban has bought the Dallas Mavericks and turned them into one of the NBA's most successful franchises. At first, he was known for sitting near the court and loudly berating the referees, but he became more widely famous after appearing on "Dancing With The Stars."
(Soundbite of show "Dancing With The Star")
Mr. DANIEL MCPHERSON (Host, "Dancing With The Stars") Welcome back to "Dancing With The Stars." Our great big night of mambos and quick steps continues with the man Bruno dubbed the bouncing bionic billionaire. It's entrepreneur Mark Cuban and his partner, Kim Johnson.
GOODWYN: But Cuban was stiff and struggled with the samba.
(Soundbite of Mark Cuban interview)
Mr. MARK CUBAN (Owner, Dallas Mavericks): We're going to practice long, and we're going to practice hard, and I'm going to get better.
GOODWYN: Columbia law professor John Coffee believes Mark Cuban's turns around the national dance floor, brief though they may have been, are now not doing the Dallas entrepreneur any favors.
Prof. COFFEE: Frankly, Mr. Cuban is an inviting target for a criminal prosecution because the government likes to find high-profile people that will achieve their general deterrent purpose of telling the whole country that insider trading is unlawful.
GOODWYN: Surprising though it may seem, Mark Cuban is not the first "Dancing With The Stars" alumnus to be charge with financial fraud. Race car driver Helio Castroneves, who actually won the competition, is charged with evading his taxes. Wade Goodwyn, NPR News, Dallas.
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