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.
Cuban has testified that he was invited to be an investor in the private placement but declined, and began selling his stocks that day.
Last week, the SEC presented video testimony from Fauré, who said Cuban told him upon learning of the offering plan: “Now I’m screwed. I can’t sell.”
In his testimony on Monday, Cuban denied making that statement and said “it makes no sense.”
“On multiple occasions I had said I was going to sell my stock,” Cuban testified.
He said he had never been told the information was confidential, nor had he signed a confidentiality agreement, nor made an oral promise not to share the information about the private offering.
Fauré could not be subpoenaed to testify in person because he is a Canadian citizen.
Cuban testified all day Thursday. The trial opened on October 1 and is expected to last eight to 10 days. The SEC brought the civil lawsuit against Cuban in November 2008. A judge dismissed the suit in 2009 but an appeals court revived the case the following year.
The case is SEC v. Cuban, U.S. District Court, Northern District of Texas, No. 08-02050.
Reporting by Jana Pruet; Editing by Karen Brooks, Greg McCune and Grant McCool