The crime Cuban was accused of was selling his 600,000 shares of mamma.com stock on June 28, 2004. He allegedly sold these shares immediately upon hearing from CEO Guy Faure that the company was planning an equity offering that would significantly dilute his 6.3% stake in the company.
The multibillionaire was charged as illegally insider trading because he was given information that had not been awarded to the general public.
The Securities and Exchange Commission (SEC) reported that Cuban avoided an estimated loss of $750,000 after the Canadian-based company announced their equity offering which caused the company’s price to drop 9.3% on Jun 30, 2004.
The always vocal Mark Cuban has argued that he did nothing wrong, and that all the information he was given was not secret or confidential information. And with Forbes valuing Cuban at $2.5 billion, $750,000 seems like a rather minor amount of money.
The NY Times reports that 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.” With the loss of this battle, there is concern with the organization’s capability of winning crucial cases. This loss might also undermine the SEC’s new campaign to hold more individuals accountable at trial.
The SEC’s spokesman, John Nester, stated in a press release, “We respect the jury’s 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.”
The case against Cuban doesn’t seem to have been a difficult one as the nine-person jury decided in less than four hours that Cuban was not liable under the federal securities laws to have committed insider trading.
Cuban was facing an approximate $2 million fine, but was not concerned so much about the money, but more so about clearing his name and shutting up the SEC.
After he received the “not guilty” verdict Cuban said in a news conference, “I hope this result shines a light on the SEC abuses that I have witnessed… and causes the agency to change the way they do business.”