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WASHINGTON (Reuters) - The internal watchdog at the Securities and Exchange Commission has concluded that the accusations of investigative misconduct against the enforcement division by Dallas Mavericks basketball team owner Mark Cuban have no merit, according to a person familiar with the matter.
The SEC sued Cuban in 2008 for insider trading, alleging that he had sold his 6.3 percent stake in Mamma.com in June 2004 after learning confidentially that the Montreal-based search engine company was planning a stock offering. The SEC said Cuban's sale allowed him to avoid more than $750,000 of losses.
The case was initially dropped in July 2009 by a federal judge who ruled that Cuban did not qualify as an insider. But last September, Cuban was ordered to face the charges by a federal appeals court, reviving the high-profile insider trading case.
In both court filings and in complaints to the SEC's inspector general, Cuban had claimed that he was unfairly treated by SEC enforcement attorneys.
He accused the SEC of conducting the probe in "an unfair, biased, and improper manner designed to prevent him from successfully persuading the SEC not to bring an enforcement action."
His complaints include that investigators pursued the case with bias, intimidated a witness and abused the "Wells notice" process, which is the method the SEC uses to alert targets of probes that the agency may bring charges against them.
In a recently completed report that examined Cuban's claims, SEC Inspector General H. David Kotz concluded that Cuban's allegations have no merit, according to a person familiar with the report. The person declined to be named because the findings have not yet been made public.
An attorney for Cuban and the SEC's inspector general could not be immediately reached for comment. John Nester, a spokesman for the SEC, declined to comment.
Kotz's findings mark the latest setback for Cuban in his defense against the insider-trading charges.
In July, U.S. District Judge Sidney Fitzwater tossed out one of Cuban's defenses in the case, ruling that Cuban failed to show that the SEC had investigated him improperly.
Had the judge ruled in his favor, he would have then been allowed to argue that the SEC had "unclean hands."
At the time of the ruling, however, the judge did not take any position on whether or not Cuban's allegations of misconduct had merit.
In a previous interview with Reuters, Cuban's attorney Lyle Roberts had called the ruling a "minor" issue, saying Cuban still has a long list of other defenses.
Reporting by Sarah N. Lynch, Editing by Sandra Maler