Cuban lawyers 'to push for dismissal' of insider trading case

27 May 2009

Lawyers acting for entrepreneur Mark Cuban will today (May 26th) push for the Securities and Exchange Commission's (SEC) insider trading case against their client to be dismissed.

According to the Dallas Morning News, Mr Cuban's defense team will argue that the businessman and owner of the Dallas Mavericks basketball franchise had no fiduciary duty to keep information about a private share offering by Canadian company Mamma.com confidential.

The SEC's complaint, which was filed in November, alleges that Mr Cuban was informed of the share offering in June 2004 and agreed to keep the information secret.

However, hours later, the agency said he contacted his broker and ordered him to ditch his entire holding in Mamma.com.

The SEC contests that the entrepreneur avoided a loss of $750,000 by selling his shares in the company on the back of the non-public information.

However, in February, five law professors lent their support to Mr Cuban, arguing that the SEC's case amounts to an "invalid exercise of the agency's rule-making authority".

The professors' brief argued that a confidentiality agreement is not sufficient to create a fiduciary duty or "similar relationship of trust".

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