Mark Cuban tells jury unaware offering confidential when sold shares

Thu Oct 3, 2013 9:52pm EDT
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By Jana J. Pruet

DALLAS (Reuters) - Mark Cuban, the billionaire owner of the Dallas Mavericks basketball team, told jurors at his insider trading trial he was angry when he learned an Internet company he invested in was planning an equity offering but was not told the information was confidential before he sold his shares in the firm.

Cuban was called to testify on Thursday by the U.S. Securities and Exchange Commission, which accused him of dumping his $7.9 million worth of shares in Montreal-based Internet search company Inc in June 2004 after learning that it planned a private placement that would dilute his stake.

He acknowledged to jurors and a packed courtroom in Dallas federal court that he did not support the offering, but that he emailed his broker a day after the sales stopped to "make sure" they were "kosher," and asked him to "check with your folks."

Cuban said he never got a written answer, but "presumed they'd do their job."

The SEC accuses Cuban, 55, of trading on inside information when he unloaded his 600,000 shares after learning in a June 28, 2004 phone call from Chief Executive Guy Fauré about the offering, which would have dropped Cuban's stake to 4.9 percent from 6.3 percent. shares dropped 9.3 percent on June 30, 2004, the morning after the offering was announced. By that time, Cuban had already sold his shares, avoiding a $750,000 loss.

Cuban is estimated by Forbes magazine to have a $2.5 billion net worth. He has maintained that there was nothing wrong with his trades.

In his 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, known as private investment in public equity (PIPE).   Continued...

Mark Cuban (L), the billionaire owner of the NBA's Dallas Mavericks, and his attorney Stephen Best (R) approach U.S District Court for the opening day of his insider trading trial in Dallas, Texas September 30, 2013. REUTERS/Tim Sharp