Following a defense verdict in the insider trading case brought against him by the SEC, Dallas Mavericks owner Mark Cuban has not been sitting on the bench—but rather using his blog to stay on the offensive. Since the October 16, 2013 verdict, Cuban continues to post about the case on his blog—including, just a few days ago, blogging about when his own blog became the focus of the trial. According to his October 26 post, an SEC attorney asked him during trial if everything he posted on his blog was true information, to which he replied that it was meant more “to communicate a point” and stimulate discussion. Following up, the SEC attorney asked: “If you post on your blog that you think the Lakers are going to stink in 2013 . . . you’re not telling this jury that that’s an opinion you don’t honestly hold, right?” Cuban posted that the courtroom “cracked up” when he replied “This year?”, before going on to answer: “Well, no. In 2004, I wouldn’t say it. They had Shaq, they had Kobe, they actually went to the finals . . . To answer your question, if I said in 2004 that they stink, I didn’t believe it.” In an earlier blog entry, Cuban also poked fun at the former Head of Enforcement—posting about internal emails, disclosed earlier in the case, in which SEC attorneys commented on photos of Cuban.
All of this comes after the jury—deliberating for less than four hours after hearing the evidence over two weeks—found that the SEC had failed to prove elements of its case. The SEC alleged that Cuban engaged in insider trading, in violation of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and SEC Rule 10b-5, by selling his shares of Mamma.com, after learning that the company was to engage in a PIPE offering, in advance of the public announcement—allegedly avoiding losses of $750,000. Cuban argued that he had no duty to keep the PIPE offering confidential and was free to trade on the information. He also contended that the PIPE offering was public information and not material in any event. Cuban initially prevailed on a motion to dismiss in 2009, but it was subsequently reversed by the Fifth Circuit in 2010. At trial, the SEC focused on a misappropriation theory of insider trading, which, the Court instructed the jury, requires proving that the defendant knowingly or with severe recklessness misappropriated material, nonpublic information for securities trading purposes, in breach of a duty owed to the source of the information. The jury found that the SEC had failed to prove, among other elements, that Cuban had received material nonpublic information or that he agreed to keep the information confidential or abstain from trading on it.
According to some commentators, this is the most expensive individual insider trading case the Commission has ever taken to trial. At least one SEC lawyer reportedly told a Texas news outlet that it is unlikely that the SEC will pursue an appeal or seek a new trial.