Saturday, May 15, 2010

SEC vs. Cuban, Round 2

"Like the adage, 'beware of Greeks bearing gifts,' perhaps the [SEC] should consider whether to beware of litigating against billionaires. Its insider-trading suit against Mark Cuban, the billionaire owner of the Dallas Mavericks basketball team, has turned into a pitched battle that is being fouight in two federal district courts and one federal appeals court. ... Having won an order dismssing the SEC case against him in 2009, he did not simply take his ball and go home--especially after the commission appealed. Instead, Mr. Cuban went on the offensive. ... The legal fees in the various cases have undoubtedly exceeded the amount at issue [$750,000] in the insider-trading case. but this seems to more of a grudge match in which money is no object. ... Judge Sidney A. Fitzwater of Federal district Court in Dallas found that the SEC did not have the authority to adopt the rule and that the SEC had not alleged that Mr. Cuban agreed not to trade in the information while maintaining its confidentiality. ... Mr. Cuban's appellate brief argues that the SEC is improperly attempting to convert an alleged breach of contract into a federal securities fraud' because any agrrement he might have made did not impose an obligation to refrain from selling his shares. Without a fiduciary duty to, there can be no insider trading liability, despite the SEC's attempt to create one in Rule 10b5-2. ... Judge Fitzwater allowed discovery of the SEC' conduct in pursuing the case", Peter Henning at the NYT, 3 April 2010, link:

Go Cuban! The SEC has shown time and time again, it cannot, or will not, distinguish breach of contract from securities fraud cases. It has also been vindicative to those who expose its incompetence, ever since 1973's Ray Dirks fiasco.

1 comment:

Anonymous said...

Go Cuban!

Most folks can't afford to fight the SEC... do this for them.