It's been a rough stretch for Mark Cuban
So much for the short-lived joy of an OT win in New York.
He's so fine
Outspoken Mavs owner Mark Cuban was charged Monday with insider trading. Of course, this isn't the first time he's been in hot water recently. Check out his laundry list of NBA discretions.
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The SEC alleges that Cuban sold 600,000 shares of search engine Mamma.com in 2004 based on non-public information, saving himself about $750,000 — walking around money for the NBA's most entertaining owner — when the stock opened lower in its private offering the following day.
In his inimitable style Cuban has already refuted the charges on his blog, writing, "I am disappointed that the Commission chose to bring this case based upon its Enforcement staff's win-at-any-cost ambitions. The staff's process was result-oriented, facts be damned. The government's claims are false and they will be proven to be so."
As it stands, the civil suit merely seeks financial penalties for the alleged wrongdoing. But as Martha Stewart learned the hard way, criminal charges can be tacked on if investigators believe they have been lied to.
Which means Cuban will have to tread carefully around the question of why he sold all his shares in Mamma.com in what the SEC alleges was a four-hour window after he learned that the opening price in the private offering would be $11.89, almost 10 percent off its previous day's closing price of $13.105.
Stewart sold her ImClone stock on the eve of bad news and made a $45,000 profit. When her explanation of the sale stretched credulity she was charged with obstruction of justice for which she was convicted. (At the time of her conviction, Stewart had personally lost close to $100M as her own company's stock plummeted, a cautionary tale as Cuban formulates his defense.)
Like Stewart before him, Cuban no doubt feels he's the target of selective prosecution. And he's probably right. All SEC prosecution seems selective.
After all, isn't charging a fat cat with insider trading like deciding which of the thousand cars on the freeway exceeding the speed limit to cite? It's like holding in the NFL. You could call it on every play.
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| This time, Mark Cuban is in trouble with the whistle blowers ... at the Securities and Exchange Commission. (Mark J. Terrill / Associated Press) |
Or are we supposed to assume that when a stockholder hears bad news whispered at the country club or in the conference room or at a cocktail party they just take it in the shorts when the stock tanks because selling would be improper and, ahem, illegal? (Imagine if a coach knew his small forward was going to miss his next 100 shots but it was illegal to bench him if he knew this.)
And what if you are given inside information that you did not solicit? Are you still obliged to eat the loss? And couldn't this create the possible scenario of executives sharing proprietary information with large shareholders for the purpose of making it illegal for them to sell?
Cuban shielding himself against $750,000 of Mamma.com losses is hardly the equivalent of Enron officials dumping $1.1 billion in stock while encouraging employees and other investors to keep buying.
In an ironic twist, Cuban produced the outstanding documentary Enron: The Smartest Guys in the Room. In an even more ironic twist, Cuban is the majority partner in sharesleuth.com, a site dedicated to exposing securities fraud and corporate malfeasance. Maybe the SEC doesn't appreciate the help.
It's not that the SEC's allegations aren't serious, it would just seem that the commission has bigger fish to fry.
As Wall Street has been immolating in a conflagration of deregulation, the SEC dedicates a team of investigators to nailing Cuban for allegedly dodging a loss of $1.21 a share? While Bear Stearns and Lehman Brothers and Merrill Lynch disintegrated, the SEC was focused like a laser on Mamma.com.
Congratulations, Commissioner, on the Jaywalking Task Force but there's a gang war going on here.
There's no good time to be charged with insider trading. But these charges come during a particularly rough stretch for Cuban, who has described himself as the luckiest guy in the world but might not be doing so again for awhile.
Was it really just over two years ago that the Mavericks were up 2-0 and seemingly on their way to an NBA title?
Here's what's happened to Cuban since:
June, 2006 — The Mavs lose four straight in the NBA Finals to the Heat as Cuban brings his playoff fine total to $450,000 for questioning the legitimately questionable officiating.
May, 2007 — After winning 65 games in the regular season, the Mavs lose their 1-versus-8 first-round matchup to the Warriors in six games.
October, 2007 — Cuban is voted off Dancing with the Stars, failing to crack the top 7. This is the dancing equivalent of being swept in the conference semis.
February, 2008 — The Mavericks acquire 34-year-old point-guard-of-the-past Jason Kidd (and his 36.6 shooting percentage) for point-guard-of-the-future Devin Harris in a nine-player mega-deal that costs Dallas about $11M.
April, 2008 — The Mavs again lose in the first round of the playoffs, falling in five to the Hornets as Kidd is schooled by Chris Paul.
June, 2008 — Cuban receives predictable patriotic blowback after remarks critical of Olympic participation by his employees/players.
September, 2008 — Mavericks forward Josh Howard is caught on tape saying the Star-Spangled Banner means nothing to him because he's black, eliciting a defense by Cuban and a deluge of hate mail to his blog.
November 2008 — The Chicago Sun-Times cites an unnamed baseball source saying there is "zero chance" Cuban, one of five bidders, will acquire the Cubs.
November, 2008 — The Mavericks open the season 2-7 and look like a lock for the lottery in the deep Western Conference. Devin Harris is averaging 23 points and 6.2 assists per game for the Nets.
November 2008 — Cuban is charged by the SEC.
How's your month going?
The window of opportunity for his Mavericks has slammed shut on his fingers. Baseball's stodgy owners likely don't want him in their club. And now the SEC delivers this early holiday greeting.
What's it going to take for a brash, buoyant, blogging billionaire to catch a break?
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