Mark Cuban, owner of the Dallas Mavericks, Landmark Theaters, and HDNet, has been accused of insider trading. The SEC claims that, following a private conversation with the Mamma.com's CEO, Cuban sold his entire stake in the company and thereby avoided at least $750,000 in losses.
Chronologically, the SEC's complaint starts with Cuban's purchase of 600,000 shares of Mamma.com in March 2004. This was equal to a 6.3 percent stake. Mamma.com then decided to conduct a PIPE ("private investment in public equity") offering, and its CEO contacted Cuban on June 28th.
According to the SEC, "Cuban agreed that he would keep whatever information the CEO intended to share with him confidential. The CEO, in reliance on Cuban's agreement to keep the information confidential, proceeded to tell Cuban about the PIPE offering. Cuban became very upset and angry during the conversation, and said, among other things, that he did not like PIPEs because they dilute the existing shareholders. At the end of the call, Cuban told the CEO 'Well, now I'm screwed. I can't sell.'"
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