I think he proved a major point today in how the SEC has no transparency and if not for his money, he wouldn't have had any choice but to lay down for them. It's a broken system.
Good for him!
Perhaps if you disagree that it's "clear cut", you at least agree that it was plausible. It wasn't simply bullying, that seems certain.
His defense was not that he didn't trade based on a tip, but that he never agreed to keep the tip confidential, and he challenged the definition of what an insider is.
This is a technicality. That's the problem with insider trading laws - "insider" isn't really defined. So, although it's often common sense and most people can make a judgment call on the spirit of the law, this often won't be sufficient for a trial. Still, this doesn't mean the SEC is wrong to pursue such cases.
Just knowing the timing alone would suggest a greater than 50% chance of him being guilty to me. I'd convict him in 5 minutes.
The government's claim: Mark Cuban was on a phone call where he was told information and promised not to trade based on it. He immediately went out and sold his stock.
Mark Cuban's claim: Mark Cuban was on a phone call where he was told information but didn't promise anything. He immediately went out and sold his stock.
Both of these claims would exhibit the same timing, so I don't see how timing can help decide the important question, which was whether he was technically an "insider" for the purpose of the law.
http://www.professorbainbridge.com/professorbainbridgecom/20...
Apparently, simply owning stock is not enough to make you an "insider". You have to be a fiduciary (i.e. be an officer, or a controlling shareholder, or on the board, or similar), or owe a fiduciary duty to the company.
- Cuban was the largest shareholder
- Cuban was told that the company planned to offer a deal that allowed for more purchases at a 10% discount, diluting his stock. He was told this before the public announcement, and sold his stock the day before the public announcement.
None of this was really disputed. What was disputed was whether or not Cuban had a conversation that acknowledged he was an insider and that he couldn't sell, and whether or not there was an implied confidentiality agreement. This would suggest admission of guilt as well as satisfy the "misappropriation" definition of insider in the article you linked, since they couldn't satisfy the fiduciary definition.
So, he traded based on non-public, adverse information, and saved himself from a substantial loss. Despite this, the SEC failed to convince the jury that he fit any formal definition of "insider".
I think we can all agree that whoever bought all of his stock prior to the public announcement of the dilution did not have his advantage, and his advantage came solely from a position of privilege within the company.
That really doesn't matter, since it was a puny 6%.