Mark Cuban tells insider trading trial share sale was long planned
By Jana J. Pruet
DALLAS (Reuters) - Dallas Mavericks basketball team owner Mark Cuban testified at his insider trading trial on Monday that he had said "on multiple occasions" he intended to sell a stake in an Internet search firm before he learned the stake was about to lose value.
Cuban, 55, estimated by Forbes magazine to have a net worth of $2.5 billion, is accused by the U.S. Securities and Exchange Commission of trading on non-public information when he sold his 600,000 shares - worth $7.9 million - and avoided a $750,000 loss in Internet search company Mamma.com Inc in June 2004.
Cuban, who rose to prominence before the dot-com crash by selling his company, Broadcast.com, in 1999 to Yahoo Inc for $5.7 billion, has said he did nothing wrong when he sold his 6.3 percent stake in Mamma.com.
The SEC is seeking to recoup Cuban's gains and impose fines if the jury rules against Cuban in the civil trial in federal court in Dallas.
The SEC accuses Cuban of selling the shares soon after learning from Mamma.com Chief Executive Guy Fauré that the Montreal-based company was planning a private placement that would dilute the holdings of Cuban and other shareholders.
Cuban told jurors on Monday that he had heard in April 2004 of a possible connection between Mamma.com and a known stock swindler, the late Irving Kott, in a phone call from an investigator with the Federal Bureau of Investigation.
He was already questioning the company's integrity, Cuban testified, when he found out about the private placement in June. Mamma.com shares dropped 9.3 percent on the morning after the offering was announced. By that time, Cuban had already sold his shares.
In earlier testimony, Cuban described himself as a conservative investor who had never been involved with a company that raised funds through the type of offering planned by Mamma.com, known as private investment in public equity (PIPE), because he believes it to be a signal of financial distress. Continued...