Monday, June 1, 2009

Mark Cuban sues SEC over insider trading documents

You gotta love a billionaire who believes he has been wrongly accused and is willing to fight to clear his name. Mark Cuban, named in an insider trading case by the SEC, is striking back.

A fair reading of the case against him reveals that it is not much of a case. The SEC is seeking to expand the rules against insider trading yet again. Those rules have been stretched so far as to make the rule unrecognizable to the original drafters - the SEC and the courts have actually interpreted the statutes as if a key phrase is missing.

I have blogged about the case in the past, (Mark Cuban and the SEC Improper Trading Investigation, Cuban's Duty of Trust?, and The Cuban Case and Confidentiality), so my views on the case are pretty clear.

Last week, Mark Cuban's attorneys argued a motion to dismiss the SEC complaint in federal court. While I believe his motion has a sound legal basis (I do not believe the SEC's complaint states a valid cause of action), motions to dismiss complaints filed by government entities have a very low success rate, and it is doubtful that the motion will be granted.

But it sets up Mr. Cuban's defense, and shows the weaknesses in the SEC's case, even if the case is not thrown out. A great defensive move, and one that undoubtedly cost some money.

Next we learn that Mr. Cuban is suing the SEC. Now, there is a millionaire who is upset. He has filed a complaint in federal court alleging that the SEC has violated the Freedom of Information Act in connection with his requests to them under the Act.

Having dealt with the SEC and FOIA requests in the past, his allegations do not surprise me. Assuming he can prove what he alleges, the SEC is once again going to have egg on its face, and an additional battle in the insider trading case, as Cuban will be able to argue that they have acted in bad faith in dealing with him. That is if the SEC loses of course.

The press story is linked below. This should be an interesting twist to the case.

Mark Cuban sues SEC over insider trading documents

Post a Comment