In a ruling today, the Fifth Circuit Court of Appeals reinstated the SEC's 2008 insider trading case against Mark Cuban. In the ruling, the court stated, "The allegations, taken in their entirety, provide more than a plausible basis to find that the understanding between the CEO and Cuban was that he was not to trade, that it was more than a simple confidentiality agreement."
The SEC's case against Mr. Cuban centers on the sale of his stake in Mamma.com just before the company announced a private placement of shares. The SEC alleges that Mr. Cuban had conversations with the then CEO of Mamma.com and allegedly agreed to keep the information confidential. The SEC alleges that Mr. Cuban engaged in insider trading when he sold shares in Mamma.com.
Today's ruling by the Fifth Circuit reverses a lower courts ruling from July of 2009, dismissing the SEC's case against Mr. Cuban, which we wrote about here.
We will write a more detailed post on today's opinion soon.
A copy of today's opinion can be found on the DU Corporate Governance Website.