After several months without news, the Mark Cuban insider trading case is back.
The SEC’s civil charge against the Dallas Mavericks owner is over the fact that he sold shares in tiny search engine Mamma.com immediately after its CEO called him and told him that the company would take a private investment (PIPE), which would dilute Cuban’s stake. Cuban’s defence is that he isn’t an insider, and as we’ve pointed out, insider trading isn’t about trading on inside information, it’s about being an insider and trading on insider information — an important distinction.
Cuban’s fielded several top-flight legal minds to make this case:
AP: Five respected law professors have filed a brief in support of Cuban’s position. The professors – Alan Bromberg of Southern Methodist University in Dallas, Stephen Bainbridge of UCLA [Ed note: A popular legal blogger, as well], Allen Ferrell of Harvard, Todd Henderson of the University of Chicago and Jonathan Macey of Yale – weren’t compensated for signing off on the brief, according to the document.
In an interview with The Associated Press, Bromberg said he researched the case after being contacted by Cuban’s attorney, Ralph Ferrara, and came to the conclusion that the SEC has gone too far.
“It’s like if somebody from company X called you and mentioned there’s about to be an acquisition at a very attractive price but asked you not to tell anybody,” Bromberg said. “You might say, ‘Well, sure, I never spill information I get from prospects or contacts,’ or you might say, just as a courtesy, ‘I’ll keep this information confidential.’ Does that make you an insider? We don’t think so.”