Tuesday, May 26, 2009
Cuban asks for dismissal of SEC case
DALLAS -- Mark Cuban was uncharacteristically reserved when he appeared in a federal courtroom Tuesday to hear attorneys argue the merits of the Securities and Exchange Commission's case against him for insider trading.
Sitting in the front row of the gallery with members of his legal team, the Dallas Mavericks owner wore a black suit instead of a T-shirt and jeans, his game-night attire, and his mood rarely changed as he listened intently while attorneys spoke for and against his motion to have the case dismissed.
After the hour-long hearing, which ended without an immediate decision from U.S. District Judge Sidney A. Fitzwater, the normally animated and combative billionaire declined comment.
"Just write about how good I look in my suit," he said in the hallway outside the courtroom. "I haven't worn it in 20 years."
Later, as he prepared to drive away in a black Cadillac Escalade, he told reporters to note that he was "driving American" as well as a hybrid vehicle.
The hearing allowed attorneys to articulate arguments, sometimes in response to questions from Fitzwater, previously stated in motions and briefs since the suit's filing in November.
The SEC alleges that Cuban was involved in insider trading when he sold shares in an Internet search engine company, Mamma.com Inc., after receiving confidential information about a private offering in 2004. Selling his 600,000 shares, which represented a 6.3-percent stake in the company, allowed Cuban to avoid a loss of $750,000, according to the SEC.
Cuban's legal team doesn't acknowledge those facts as true. But even if they are, Cuban's lawyers contend, he didn't engage in insider trading because he wasn't legally an "insider."
During the hearing, Cuban attorney Ralph Ferrara said Supreme Court decisions make it clear that an "insider" is someone who had a pre-existing fiduciary duty or similar relationship with a company. Because Cuban was simply an investor who allegedly promised confidentiality during a phone call, he isn't liable, Ferrara argued.
Ferrara accused the SEC of filing a "trimmed down" complaint aimed at defying the Supreme Court's rulings and extending the agency's reach.
"This is just the latest attempt by the SEC to remove itself from those bounds," he said.
SEC attorney Kevin O'Rourke countered by saying the case against Cuban is a "straight down the middle" use of insider trading laws. Breaking a confidential agreement is "the type of deception and fraud securities laws were designed to reach," he said.
Fitzwater left the bench without comment after hearing the arguments. Attorneys for Cuban said afterward they could not speculate on when the judge might deliver a written opinion.
Cuban filed his motion to dismiss in January and later buttressed his argument with a brief signed by five respected law professors. In its response, the SEC called Cuban "shameless" for attempting to say he could legally trade on confidential information.