Find Post Investigations On:
Facebook Scribd Twitter
Friendfeed RSS Google Reader
» About This Blog | Meet the Investigative Team | Subscribe
Ongoing Investigation

Top Secret America

The Post explores the top secret world the government created in response to the attacks of Sept. 11.

Ongoing Investigation

The Hidden Life of Guns

How guns move through American society, from store counter to crime scene.

Have a Tip?

Talk to Us

If you have solid tips, news or documents on potential ethical violations or abuses of power, we want to know. Send us your suggestions.
• E-mail Us


Post Investigations
In-depth investigative news
and multimedia from The Washington Post.
• Special Reports
• The Blog

Reporters' Notebook
An insider's guide to investigative news: reporters offer insights on their stories.

The Daily Read
A daily look at investigative news of note across the Web.

Top Picks
A weekly review of the best
in-depth and investigative reports from across the nation.

Hot Documents
Court filings, letters, audits and other documents of interest.

D.C. Region
Post coverage of investigative news in Maryland, Virginia and the District.

Washington Watchdogs
A periodic look into official government investigations.

Help! What Is RSS?
Find out how to follow Post Investigations in your favorite RSS reader.

Hot Comments

Unfortunately I believe that we are limited in what we can focus on. I think that if we proceed with the partisan sideshow of prosecuting Bush admin. officials, healthcare will get lost in the brouhaha.
— Posted by denamom, Obama's Quandary...

Recent Posts
Bob Woodward

The Washington Post's permanent investigative unit was set up in 1982 under Bob Woodward.

See what you missed, find what you're looking for.
Blog Archive »
Investigations Archive »

Have a Tip?
Send us information on ethics violations or abuses of power.
E-Mail Us »

Notable investigative projects from other news outlets.
On the Web »
Top Picks »

Mark Cuban Accused of Insider Trading

POSTED: 05:55 PM ET, 11/17/2008 by Derek Kravitz

Mark Cuban, the eccentric Dallas Mavericks owner and self-made Internet billionaire, was charged today with insider trading by the Securities and Exchange Commission.

Cuban, 50, is accused of illegally selling 600,000 shares of stock in, a company he himself had described as an "up and coming search engine" in a blog posting from 2005.

Problem is, a Montreal-based start-up now known as Copernic, began raising capital in June 2004 through a process known as a PIPE ("private investment in public equity") offering. Cuban knew of the offering beforehand and sold his shares hours before it became official, prosecutors allege.

By selling his 6.3 percent stake in the company, Cuban avoided more than $750,000 in losses, prosecutors say in court filings.

In a statement, Cuban denied wrongdoing and said he was "disappointed that the Commission chose to bring this case based upon its Enforcement staff's win-at-any-cost ambitions. The staff's process was result-oriented, facts be damned. The government's claims are false and they will be proven to be so."

Mark Cuban's attorney, Christopher Clark, defended his client on Fox Business Network, arguing that Cuban knew "there was going to be an offering...but that, that doesn't equate to inside trading:"

According to court documents, on June 28, 2004, CEO Guy Faure sent Cuban a message, titled "Call me pls." In the e-mail, CEO told Cuban to call him "ASAP." Cuban phoned Faure minutes later from the American Airlines Center in Dallas and spoke to Faure for 8-1/2 minutes.

In the conversation they allegedly discussed confidential information about the PIPE offering. At the end of the conversation, Cuban told Faure: "Well, now I'm screwed. I can't sell."

(Faure then wrote to other board members that "as anticipated (Cuban) initially 'flew off the handle.'")

After calling a sales representative to ask about the offering's details, Cuban called his Dallas broker and told him to sell his entire stake in the company, saying: "Sell what you can tonight and just get me out the next day."

On his blog, Cuban later wrote that PIPE financing was a "huge red flag" for him. "I don't want to own stock in companies that use this method of financing.

"Why? Because I don't like the idea of selling in a private placement, stock for less than the market price, and then to make matters worse, pushing the price lower with the issuance of warrants. So I sold the stock."

On June 30,'s stock opened at $11.89, down 9.3 percent, and continued to decline over the next week.

The Dallas Morning News notes in an editorial today that it may be "hard to believe that a man as smart and as rich as Mr. Cuban, the Dallas Mavericks' owner, would risk jail to save $750,000 in dumping his 6 percent ownership in the Internet search company,, as the government alleges he did."

Wired opined that "regardless of how the SEC's insider trading case against Mark Cuban plays out, one thing is fairly certain: It won't be settled quietly." In the same article, Alexander Bono, the chairman of securities litigation in the Philadelphia office of Schnader Harrison Segal & Lewis, said that historically the SEC likes to make examples of "well-known individuals" like Martha Stewart, the television personality who was convicted in 2003 of illegally trading ImClone stock and served five months in a federal prison.

Still, as The Wall Street Journal's "Deal Journal" blog says, "insider trading is considered notoriously hard to prove."

Read the full court filings against Cuban:
Download Document (PDF) | More Hot Documents

By Derek Kravitz |  November 17, 2008; 5:55 PM ET Hot Documents
Previous: Vetting Bill Clinton Could Bring Controversy | Next: Appointees Burrow In, Iraqi Watchdogs Removed, Venezuela's Murder Rate Soars


Please email us to report offensive comments.

Post a Comment

We encourage users to analyze, comment on and even challenge's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.

characters remaining


© 2010 The Washington Post Company