According to The Smoking Gun, Mark Cuban has been indicted on one count of insider trading.
Apparently, Cuban had stake in a company called Momma.com. Upon hearing about an upcoming sale of the company that would devalue his stock he sold 600,000 shares, saving himself a loss of $750,000. The SEC does not like these kinds of moves.
Just in terms of this case, Cuban is facing a fine of up to three times the amount of profit (or lack of losses) for his crime. Odds of jail time are almost zero for the circumstances surrounding this trade.
The timing of this indictment is actually good and bad for Cuban.
Currently, there's a bill in the Senate that stiffens the penalty surrounding this type of trade, makes it a felony, and adds for up to 10 years of potential jail time. In the wake of Enron and Tyco, defrauding shareholders can cost people their homes, retirement funds, college funds, etc., and is seen as a high crime.
- B/R Ticket Guide
So had this indictment come next year after the bill passed (hypothetically) it could have led to Cuban being a convicted felon.
Besides the obvious problems with that, the most interesting side effect of such a conviction would be his standing in the NBA. Would David Stern allow a convicted felon to own an NBA team?
This news is a nail in the coffin to Cuban's attempt to buy the Cubs.
In this financial market there can't be too many people looking to spend $1 billion on an MLB franchise. Media reports have always thought that a Cuban-backed ownership group would not be welcome by Bud Selig. This has to pretty much extinguish any hope of that happening.
Sports fans remember what a joke Dallas was before Cuban bought the team. Cubs fans were ready to welcome with open arms an owner with a face and one who cared about winning more than the bottom dollar. (Of course, Cuban has managed to win and make money, but still...)
This indictment not only kills any chance for Cuban to buy the Cubs, but potentially puts him in jeopardy with the NBA. Fans love Cuban for speaking his mind about officials, NBA executives, and players, but now he'll surely be keeping a lower profile.
Cuban can certainly be annoying at times, but for those of us that follow teams whose owners seem to undercut team success to benefit their pockets (Suns and Clippers anyone?) we would love for Cuban to come buy our team.
Sorry Cubs fans, maybe year 101 will be your lucky year.
comments (4) write a comment »
write a new comment
about 1 month ago
I have to admit, him being one guy. I don't see the huge deal. So what, he got some info about what was gonna go down. He didn't like what was happening, and pulled out.
from about 1 month ago
I agree, and frankly I think that'll be the public perception, but David Stern is the wild card. No league is more image conscious than the NBA, I'm not sure what he could do, but I wouldn't put anything past him. Remember all the conflicts he and Cuban have had, I don't know how personal he takes them, but this would certainly be a good excuse.
from about 1 month ago
"he got some info about what was gonna go down. He didn't like what was happening, and pulled out."
That's pretty much the definition of insider trading. We don't allow billionaires like Cuban to do it because they are in a much better position to get inside information. We don't want them to be able to bail whenever they get that information, leaving all of us thousandaires to foot the bill.
about 1 month ago
Awesome headline!
write a new comment