Cuban Busted

Dallas Mavericks owner and media tycoon has just been charged with insider trading according to a Yahoo/CNN Money Report.

The report stems from activity that took place in June of 2004, when Cuban instructed his broker to sell 600,000 shares of "Mamma.com" just one day before it took a 9.3% dive in value, saving Cuban approximately $750,000.00.

"As we allege in the complaint, Mamma.com entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential...Less than four hours later, Mr. Cuban betrayed that trust by placing an order to sell all of his shares."

-Scott W. Friestad, Deputy Director of the SEC's Division of Enforcement. (Source:CNN Money)

Cuban has yet to be reached for comment.

The Wall Street Journal explains that Cuban was entrusted with the information that Mamma.com was "raising money through a private investment in a public entity, or PIPE." The following day, (after Cuban sold his shares) Mamma.com announced their move, resulting in the share price decline. PIPE transactions typically result in shares being sold at a reduced price (compared to the trading price) and result in a lowered trading price (as the information hits the market) as shares become diluted (more shares in the market) and the pricing of some shares is reduced (suggesting their actual value is lower).

Since Cuban's frustrated post in which he thanks the fans for hanging in their, we've yet to see any type of response, though we doubt there would be any...on his blog...before he gets arrested and receives the Martha Stewart treatment.

UPDATE 12:48 PM: Check out the text of the complaint from the SEC. Of note is that Cuban will be required to pay back the $750,000 he "gained" by selling his shares (by gained, we mean avoided losing), a prejudged amount of interest on said gain and a civil penalty (in accordance to the rule, not to exceed roughly $2.25 million)

The SEC obtained fairly specific e-mail and phone records. Of note: an e-mail entitled "Call me pls" from the CEO of Mamma.com which Cuban responded to roughly 4 minutes later, where he had an 8 minute and 35 second phone call. During said phonecall, Cuban was told by the CEO of the PIPE offering to which Cuban became purturbed and ended the call exclaiming: "Well, now I’m screwed. I can’t sell."

After investigating the PIPE withthe investment bank, Cuban called is broker and stated "sell what you can tonight and just get me out the next day.”

His broker managed to sell 10,000 shares that night (in afterhours trading) at roughly $13.50 per share. The following day his broker sold the remaining 590,000 at roughly $13.30 per share. That evening, Mamma.com announced the PIPE offering (at 6pm, after the market close). Mamma.com opened the following morning at $11.89, down 9.3%. The SEC also maintains that Cuban publically stated that he sold his shares as a direct result of the PIPE offering to Mamma.com

UPDATE II: Cuban has Responded on his blog

The Steinbrennometer is About to Pop, and Other Major Ownership Meltdowns

Looks like good ole Hank may be reaching “Threat Level Midnight.” Hank’s not quite over the boiling point but prior to last nights 18-7 bombing of the Texas Rangers, Hank Steinbrenner went on a tirade of Steinbastic performances.

Of note was that no one is safe, especially A-Rod and his new flame Madonna (because old flame Cynthia is shacking up with “I don’t wanna be a star” Lenny Kravitz…talk about a downgrade). Steinbrenner mentioned that any player could be benched or sent down to AAA ball in Scranton. As an aside, how long till Red Barons’ ticket sales jump up by a double digit percentage.

Slowly, Hank is becoming my favorite owner in all of baseball. He talks the talk, throws everyone under the bus, hasn’t given a shit and makes me laugh daily…still, I’m glad he doesn’t own the Phils…ok, that’s a lie, I’d love it!

So, we at Bad News Bloggers are going to pay homage to Hank today by listing off some of the greatest Ownership meltdowns of all time.

1. On June 19, 2006, Mavericks owner Mark Cuban had the biggest meltdown of all and one of the largest fines he’s ever received in the sum of $250,000.00. The fine was the result of the closing seconds of game 5 of the NBA finals versus the Miami Heat, where Cuban ran onto the court with a few seconds left to scream at the refs, followed by a launch at David Stern from the court and then league officials from the stands.
   
   Cuban was heard yelling: “'[Bleep] you! [Bleep] you! Your league is rigged!”
   
   And now the Cuban tirade seems only slightly more justified…Go figure.


2. On October 19, 2005, Zygi Wilf finally let loose on the Boat Scandal that rocked the Minnesota Vikings Franchise. Wilf went on a profanity binge and threatened to boot any player involved right off the roster. And while some players remained after the incident, Wilf's tirade resulted in a Code of Conduct for the organization and some management extremism to ensure this would never happen again. Oh, and they learned that not only does Daunte Culpepper suck, but he's also a douche.


3. The list wouldn't be complete without George Steinbrenner. In what was a massive act of defiance, Steinbrenner signed Dave Winfield to a massive contract which stipulated that he would pay a Winfield charity $300,000. Steinbrenner refused later and when Winfield pushed, he received the ultimate rebuttal; "I'm not going to pay." Winfield would later enter the Hall of Fame...as a Padre


4. Perhaps not so much of a tirade as a dirty move, but in 1998, Jerry Jones had the last laugh when he forced former Super Bowl Champion Barry Switzer to resign. Jones took, what seemed to be, great pleasure in announcing Switzer's resignation and while he did win a Super Bowl, basically suggested that Switzer did indeed suck. And yes, this all started with Switzer's gun charges and Jones' $75,000 fine.


5. Prior to losing his job in 2008, John McLaren lost his cool and was prompty followed up by Club President Chuck Armstrong's response in which he flipped his lid on the coaching staff that provided the worst record in baseball for a payroll that topped $100 million. And while the affair was meant to be private, Armstrong's severe ripping was heard throughout Seattle.
   

Want to break down some Tirades, check out "Chip Shots" Tirade breakdown dealing with a recent Guillen Meltdown (because they're all classic).