We followed the Mark Cuban SEC case with great interest. My thoughts at the time were that it was a lousy case, and the SEC was making a mistake in bringing it. (See my prior Mark Cuban SEC posts.) Many other securities attorneys and commentators expressed the same opinion. Ultimately a federal court judge agreed, dismissing the case finding that the SEC could not win under any circumstances. The SEC appealed, and that appeal is still pending.
During the case, Cuban struck back and filed a suit against the Commission alleging that they violated the Freedom of Information Act. My post about that suit is here. That case is also still pending.
Now he is hitting harder. He is seeking sanctions against the SEC for bad faith in bringing the original charges. According to the WSJ, in the course of that discovery, Cuban learned that senior attorneys at the Commission were snickering about him in emails, swapping promotional pictures of him from a television show, and negatively commenting on him as a person, as they were investigating and filing charges.
Bad enough. However, there is also an allegation that the SEC attorney handling the case attempted to prevent an employee of a brokerage firm from speaking with Cuban's attorneys. According to the article, the employee's firm's general counsel was told that the SEC "preferred" that the GC not allow the employee to speak to Cuban's attorneys.
Regulators are sometimes accused of improper motive in conducting investigations. Hopefully, such allegations are not true, but in most instances, the defendant does not have the financial resources to investigate the allegation and prosecute a claim.
This case is different, and the SEC has a tiger by the tail. They brought a questionable case, against a public figure, and one has to wonder just what they were thinking in bringing that case. Mark Cuban may well find out exactly what they were thinking, and may just make them pay for bringing a claim in bad faith.
We will have to wait and see what happens, and how much of this is true, but given the fact that it is Mark Cuban, and not some poor unfunded registered representative, it is going to be an interesting case.
The full WSJ article, with attachments, is here.
During the case, Cuban struck back and filed a suit against the Commission alleging that they violated the Freedom of Information Act. My post about that suit is here. That case is also still pending.
Now he is hitting harder. He is seeking sanctions against the SEC for bad faith in bringing the original charges. According to the WSJ, in the course of that discovery, Cuban learned that senior attorneys at the Commission were snickering about him in emails, swapping promotional pictures of him from a television show, and negatively commenting on him as a person, as they were investigating and filing charges.
Bad enough. However, there is also an allegation that the SEC attorney handling the case attempted to prevent an employee of a brokerage firm from speaking with Cuban's attorneys. According to the article, the employee's firm's general counsel was told that the SEC "preferred" that the GC not allow the employee to speak to Cuban's attorneys.
Regulators are sometimes accused of improper motive in conducting investigations. Hopefully, such allegations are not true, but in most instances, the defendant does not have the financial resources to investigate the allegation and prosecute a claim.
This case is different, and the SEC has a tiger by the tail. They brought a questionable case, against a public figure, and one has to wonder just what they were thinking in bringing that case. Mark Cuban may well find out exactly what they were thinking, and may just make them pay for bringing a claim in bad faith.
We will have to wait and see what happens, and how much of this is true, but given the fact that it is Mark Cuban, and not some poor unfunded registered representative, it is going to be an interesting case.
The full WSJ article, with attachments, is here.
