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SEC?s Insider Trading Suit Against Mark Cuban Is Dismissed

By Amir Efrati

Breaking news out of Dallas this morning. The Securities and Exchange Commission’s insider trading lawsuit against Dallas Mavericks owner Mark Cuban (pictured) was dismissed by a federal judge, according to wire reports.

We’ve brought you gavel-to-gavel coverage of the high-profile lawsuit, which lawyers said was an aggressive move by the agency.

Cuban denied the allegations and played hard ball with the agency, both in statements on his blog and in court. Cuban even had support from five big-wig law professors, who filed an amicus brief in the case that argued Cuban did no wrong. (For an extraordinary email exchange between Cuban and an SEC attorney from Fort Worth, click here.)

As a recap, the SEC alleges that in 2004 Cuban was informed by the chief executive of Mamma.com, a company in which Cuban held a substantial amount of stock, that the company would raise money by issuing low-priced shares, a move that would probably hurt the value of Cuban's shares. Cuban then allegedly sold his stake before the share offering became public.

Among the key questions in this case is whether Cuban agreed that the information the CEO gave him would be confidential. The SEC alleged that the former Mamma.com CEO, Guy Faure, says Cuban agreed to keep the information confidential.

Cuban's lawyers — Ralph Ferrara and Christopher Clark of Dewey — said he made no such promise. Clark issued a statement: “We are grateful for the court's decision today dismissing the SEC's case against Mr. Cuban. Mr. Cuban has contended from the outset of this case that he is innocent of any wrongdoing.”

UPDATE: Here’s the dismissal ruling, which says the SEC can amend its complaint to cure its defects. No word yet on what the agency will do.

Full post as published by Law Blog - WSJ.com on July 17, 2009 (boomark / email).