Mark Cuban won a years-long fight with the federal government Wednesday when jurors said that the billionaire basketball owner and Shark Tank investor did not commit insider trading when he sold his shares in an Internet company in 2004.
The jury in federal district court in Dallas found that the Securities and Exchange Commission failed to prove several key elements of its case, including that Cuban traded on nonpublic information.
The nine-member jury deliberated for about four hours. The trial spanned three weeks.
The SEC accused Cuban of using inside information to sell $7.9 million of stock in Mamma.com Inc. in 2004 after he learned confidentially of a stock offering that would send the share price down. The agency wanted Cuban to repay $750,000 in losses that he avoided, plus pay a penalty. It was a civil lawsuit, so the Dallas Mavericks owner and regular on the ABC reality show Shark Tank didn’t face criminal charges.
Standing outside the Earle Cabell Federal Building after the ruling, Cuban again accused the SEC of lying and mischaracterizing his words.
“What was the objection we used all the time? Optional completeness, which it takes three words out of three paragraphs and makes it seem like something,” Cuban said. “They weren’t trying to use the facts to convince the jury; they were trying to deceive the jury.”
Cuban testified that he never agreed to keep information about the stock deal private and told the company that he would sell his shares.
The SEC sued Cuban more than four years after he sold his stake in Mamma.com, a search engine company that was based in Canada. The company’s CEO testified by video that Cuban agreed not to disclose information the CEO told him in 2004 about a pending stock offering that would lessen the value of Cuban’s 6 percent stake in the company.
The CEO said that Cuban, the company’s largest shareholder, acknowledged that he couldn’t sell his shares on the news. He sold them a few hours later, however, before the company announced the stock offering to the public.
The jury foreman was an older woman from the Dallas suburb of Rockwall who works for an insurance company and previously worked for a Texas state judge.
The woman said during juror questioning that she had served on a jury that acquitted a defendant charged with fraud. She gave no other details of the case.
When the SEC sued Cuban in 2008, he went after the regulators. He accused SEC staff of bias — targeting him because of his political views and wealth. He and his lawyers argued that insider-trading laws didn’t prohibit him from selling his shares.
U.S. District Judge Sidney Fitzwater agreed and dismissed the lawsuit in 2009, but his ruling was overturned by an appeals court, which sent the case back to Fitzwater for the trial that ended Wednesday.
Sports Illustrated listed Cuban among the 50 most powerful people in sports. He’s known for building the Mavericks into a winner and drawing at least $1.5 million in league fines, mostly for berating referees.