Mark Cuban scored a significant victory July 17 when a federal
district court dismissed an SEC insider trading case focused on his
2004 trading in Mamma.com. See SEC v. Cuban, Civil Action
No. 3:08-CV-2050-D (N.D. Tex. July 17, 2009)
("Cuban"). While the opinion provides a thorough
analysis of important securities law issues, the outcome should not
cause significant changes in how public companies and their
investors address the risks associated with access to material,
nonpublic information.
The SEC alleged that Cuban illegally avoided $750,000 in losses
through his 2004 sale of Mamma.com stock. Specifically, the crux of
the SEC's case was that: (a) Cuban was advised by management
that Mamma.com would sell shares in a private investment in public
equity ("PIPE") transaction; (b) Cuban agreed to keep
this information confidential; and (c) he sold his entire 600,000
share position before the PIPE transaction was announced. Cuban
moved to dismiss the complaint (and was
