Monday, November 17, 2008

Blowing 3 Billion Dollars To Save A-Milli.

Even if you're not a sports fan, you've probably heard of Mark Cuban by now. About a decade ago, Cuban quickly rose to prominence, taking the profits from the sale of a web-based radio business (, purchased by Yahoo!) and using them to purchase a previously moribund NBA franchise, the hapless Dallas Mavericks.

Cuban ushered in the era of the new type of sports franchise owner. Brash, young, and outspoken, he immediately turned the Mavs from a laughingstock into a team on the rise. By drafting wisely and not being afraid to spend money on free agents, he remade the organization's comical reputation. By doing relatively minor things like giving the players courtside massage chairs, 5-star bathrobes and DVD players in each locker, he liberally advertised that he was willing to treat his players better than other teams and pay them accordingly. In no time flat, the team build a squad around the underrated talents of Steve Nash, Dirk Nowitzki and Michael Finley. The Mavs went straight to the NBA Finals where they phoned in one of the most massive choke jobs evar in the history of all sports, blowing a 2-0 lead before succumbing to the Miami Heat. He can't blow defensive rotations and turn into a 7-foot shooting guard, so that's not Cuban's fault though.

This, however, is Cuban's fault.

Federal regulators on Monday charged Dallas Mavericks owner Mark Cuban with insider trading for allegedly using confidential information on a stock sale to avoid more than $750,000 in losses.

The Securities and Exchange Commission filed a civil lawsuit against Cuban in federal court in Dallas. The agency alleged that in June 2004, Cuban was invited to get in on the coming stock offering by Inc. after he agreed to keep the information private. The SEC said Cuban knew the shares would be sold below the current market price, and a few hours after receiving the information, told his broker to sell his entire stake of 600,000 shares in the search engine company before the public announcement of the offering.

By selling when he did, Cuban avoided losses exceeding $750,000, according to the SEC. At the time of the offering, Cuban was the largest known shareholder in the Montreal-based company, which later changed its name to Copernic Inc.

According to the Wall Street Journal, Cuban sold his ownership stake after learning the search engine company was raising money through a private investment in a public entity, or PIPE. In a PIPE transaction new shares are issued at a discount to the current trading price, the newspaper reported. The SEC is seeking a court judgment against Cuban finding that he violated the antifraud provisions of the federal securities laws, an injunction against future violations, an unspecified civil penalty and restitution of the losses Cuban allegedly avoided.

Cuban runs a Web site called, which bills itself as providing "independent Web-based reporting aimed at exposing securities fraud and corporate chicanery." An announcement on the site says there are plans for a companion,, to track the government's $700 financial rescue plan.

Cuban, 50, also owns Landmark Theaters, a large national chain dedicated to independent films, and the HDNet cable television channel. He is one of the richest people in the world, according to Forbes magazine, which pegged his net worth at $2.3 billion as of March 2007.
I know what some of ya'll are saying. Why in the ham sammich would you risk the farm to simply save $750,000?

And I'll tell you why: Because you can.

Cuban obviously didn't think he'd get caught, which is why we used the insider info the spare himself what would be a bloodbath to most of us, but is just a party weekend for him. Much like Martha Stewart, this proved to be a wrong assertion, and it's quite possible the colorful Cuban could end up doing some time in the pokey. He better hope he doesn't get stuck in a cell with any Spurs fans. That could get real ugly.

That said, I'm not going to blast Cuban for doing something so stupid. Reality is, most of us have done something equally questionable, we just didn't get caught for it.

If you've fudged an expense report, done some magic with your tax returns, failed to report income from your side bidness to the IRS, bootlegged cable TV, or anything of the sort, you prolly should withhold judgement. Yeah, these are relatively minor offenses, but in most cases you're still playing with fire nonetheless. Penitentiary chances are penitentiary chances, whether it's the $5 you spend on a counterfeit DVD, or the 3/4 of A Milli that Cuban comparatively saved with his insider trading. So let's not point fingers here.

I wish Mark Cuban the best of luck in the clink. He's a kinda soft looking guy, and he'll need all the help he can get.

Question: Do you think Cuban deserves jail time for this? Have you done anything relatively worse?

Mark Cuban Charged With Insider Trading [AP]

blog comments powered by Disqus

Post a Comment

Note: Only a member of this blog may post a comment.