On Monday, the SEC filed suit against Mark Cuban for insider trading. The suit alleges that in 2004 Cuban used non-public information to sell shares in Mamma.com, then a fledgling internet search engine.  The action allowed Cuban to avoid a $750,000 loss on the shares.

The suit states that Cuban dumped his 6.3 percent stake in the company after getting word that the company planned a private offering the next day, which would dilute the value of existing shares.

Of course, Cuban disagrees with the lawsuit, saying “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.”

The real irony here is that in 2006, Cuban started the website sharesleuth.com that is “aimed at exposing securities fraud and corporate chicanery”. Oops.

Without knowing the real facts of the case, I won’t pass judgment one way or the other. But one has to wonder, for a guy who is a billionaire, and has paid over $1 million in fines to the NBA (Cuban owns the Dallas Mavericks and sits courtside at almost every game) for voicing his opinion on the quality of the referees, is it really worth getting tangled up with the SEC over $750,000?

This likely won’t affect Cuban’s chance of purchasing the venerable Chicago Cubs franchise, as word is that he has no chance of getting approved, even though he was the highest bidder. He has simply ruffled too many feathers amongst NBA owners, and the Major League Baseball owners don’t want to deal with him either. That’s too bad, because Cuban has injected energy into the NBA and he could go a long way towards bringing excitement back to baseball.

Check out Cuban’s blog to get a bit more insight into his thoughts. It’s a nice mix of sports and business, and contains some good information.

Source: Another High Profile Case of Insider Trading

Last 5 posts by Christian Hill

• Don’t Believe What You Hear About a Housing Recovery - August 5th, 2009
• Inflation May Show It’s Ugly Head, Big Week for Bank Earnings - July 13th, 2009
• Don’t Be Afraid To Take The LEAP - July 8th, 2009
• Take Advantage of the Growing Demand for Composite Materials - June 17th, 2009
• The Ethanol Fraud - June 3rd, 2009