Cuban originally faced insider trading charges after the SEC alleged he sold 600,000 shares of a Canadian Internet search engine called Mamma.com Inc., based on information that hadn’t been made public about an impending stock offering, court records say.
A judge ruled in Cuban’s favor earlier this year, making a procedural motion in which the judge said the complaint filed by the SEC did not state a claim against Cuban.
The ruling judge, Chief Judge Sidney A. Fitzwater said at the time, “while the SEC adequately pleads that Cuban entered into a confidentiality agreement, it does not allege that he agreed, expressly or implicitly, to refrain from trading on or otherwise using for his own benefit the information the CEO was about to share.”
In a statement Wednesday, SEC spokesman John Nester said, “As we alleged in our complaint, Mark Cuban violated the antifraud provisions of the federal securities laws by engaging in illegal insider trading in the securities of Mamma.com. We believe the District Court erred in dismissing our complaint and we look forward to presenting our position to the Fifth Circuit Court of Appeals."
One of Cuban's lawyers, Steve Best, released a statement saying the courts already "dismissed the complaint based on the SEC's own version of the facts and, in the process, invalidated one of the SEC's insider trading rules. So not only did the SEC lose on the law, but, as Mr. Cuban's recent sanctions motion demonstrates, the SEC could never have won on the actual facts."
"This appeal is nothing more than the SEC's desperate attempt to shock a heartbeat into a case that was dead on arrival," Best said. "It's just one more example of wasting taxpayer money."