SEC charges Mark Cuban with Insider Trading

Sorry Chicago Cubs fans but it looks like Mark Cuban won’t be buying your team. The SEC has charged him with insider trading of Mamma.com.

In 2004, Cuban was told there would be a secondary offering of mamma.com. Instead of buying more stock, Cuban sold his 600k shares to avoid dilution. Cuban, owner of the Dallas Mavericks, saved roughly $750k in this alleged act.

It looks like Cuban will fight these charges.

No word if Martha Stewart will be advising Cuban.

But should Mark Cuban really be angrier at the SEC… or at the Wall Street Journal who ran this horrific pixelated photo of Mark on their frontpage:

“The Securities and Exchange Commission filed insider trading charges against Mark Cuban, the outspoken owner of the Dallas Mavericks, for allegedly dumping shares in Mamma.com upon learning it was raising money in a private offering (full text of complaint).

The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.

In a PIPE transaction new shares are issued at a discount to the current trading price. An announcement of a PIPE transaction is often followed by a drop in the stock price as shareholders anticipate their stake will be diluted.”