Whoa! I assumed the worst Mark Cuban related news of late was going to be his reportedly thwarted attempt to buy the Chicago Cubs.
Instead the WSJ is reporting the blogger and Dallas Mavericks owner has been charged with insider trading. From the report:
The Securities and Exchange Commission filed insider trading charges against Mark Cuban, the outspoken owner of the Dallas Mavericks, for allegedly dumping shares in Mamma.com upon learning it was raising money in a private offering.
The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.
In a PIPE transaction new shares are issued at a discount to the current trading price. An announcement of a PIPE transaction is often followed by a drop in the stock price as shareholders anticipate their stake will be diluted.
The SEC filing is here.
Looks like Sharesleuth.com, Cuban's source for "independent Web-based reporting aimed at exposing securities fraud and corporate chicanery" missed one. We'll see if Cuban responds, as he has often in the past, on his blog.
Reader Comments