DALLAS -- Mark Cuban won a yearslong fight with the federal government Wednesday when jurors said the billionaire basketball team owner 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 Mr. Cuban traded on nonpublic information.
The nine-member jury deliberated for about four hours. The trial spanned three weeks.
The SEC accused Mr. 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 Mr. Cuban to repay $750,000 in losses 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.
Mr. Cuban, who has roots in Pittsburgh's South Hills, 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 Mr. 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 Mr. Cuban agreed not to disclose information the CEO told him in 2004 about a pending stock offering that would lessen the value of Mr. Cuban's 6 percent stake in the company.
The CEO said Mr. 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.
When the SEC sued Mr. 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 Judge Fitzwater for the trial that ended Wednesday.
First Published October 16, 2013 8:00 PM