SEC Lawyers Claim Cuban "Cheated" by Using Insider Info - NBC 5 Dallas-Fort Worth

SEC Lawyers Claim Cuban "Cheated" by Using Insider Info



    SEC Lawyers Claim Cuban "Cheated" by Using Insider Info
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    Owner Mark Cuban of the Dallas Mavericks walks off the court after the Mavericks loss to the Miami Heat in game six of the 2006 NBA Finals on June 20, 2006 at American Airlines Center in Dallas, Texas. The Heat won 95-92 and win the series 4-2. (Photo by Ronald Martinez/Getty Images)

    A government lawyer says the drive to win that helps Mark Cuban succeed in business led the billionaire basketball owner to cheat by using insider information to sell stock in an Internet company.

    "Mark Cuban violated the law, and he knew better," Securities and Exchange Commission lawyer Jan Folena said Tuesday during opening statements to jurors at Cuban's insider-trading trial.

    Cuban's lawyers are expected to give his side of the case later in the day.

    It's a civil lawsuit; Cuban is not charged with a crime. The SEC wants Cuban to give up $750,000 he saved from selling his shares, plus pay a penalty that could be two or three times that amount.

    The SEC alleges that Cuban promised not to trade on information he learned in 2004 from the CEO of, a Canadian search-engine company of which Cuban owned 6 percent of all shares. The company planned a stock offering that would reduce the value of existing shares. Cuban broke his vow and sold, the agency says.

    Folena said Cuban should have waited to sell his shares until the company publicly announced the stock offering so that he wouldn't take advantage of other investors. But he couldn't do that, she said, "because in his mind, that's losing, and Mark Cuban is a winner."

    Melsheimer said that the Internet billionaire neither promised to keep the information confidential nor to refrain from trading. He said the company's CEO made up comments that he attributed to Cuban.

    "Mark Cuban didn't deceive, he didn't deceive anyone," Melsheimer said. "He did exactly what he said he would do" -- sold his shares.

    Melsheimer said there wasn't even anything secret about the stock offering. Speculation was so pervasive that it showed up on Yahoo chat sites and caused trading volume in the shares to spike. He said Cuban was upset with the company for other reasons, including an investigation into alleged ties with a stock swindler.

    Testimony began late Tuesday morning. Cuban is expected to testify at some point, but said he didn't know when. The trial is expected to last three weeks.