Billionaire Mark Cuban’s In Hot Water; May Face Fines Up to $3Million for Insider-Trading Violation

Mark Cuban, the outspoken billionaire and owner of the Dallas Mavericks, may be facing a hefty fine if found guilty of insider-trading.

Insider trading is the trading of a public company’s stock or other securities (such as bonds or stock options) by individuals with access to non-public information about the company. In various countries insider trading based on inside information is illegal. This is because it is seen as being unfair to other investors who do not have access to the information.

News broke last night that the “Shark Tank” panelist is in hot water with the Securities and Exchange Commission (SEC). Apparently, Cuban once owned shares in an Canadian-based search engine company and allegedly sold his shares of stock after he learned that Mamma.com was going to hold an offering.  Cuban owned 6 percent of all shares and greedily wanted to protect his money. But, the SEC says that was illegal to sell his shares.

The SEC claims that Cuban promised to not sell his shares. SEC lawyer Jan Felona insists that Cuban violated the law and should face a penalty (not jail time). Felona also believes that it was Cuban’s own inner will to “win” that drove him to committing this federal crime. According to the SEC, Cuban could face a $750,000 fine equivalent to the value of his shares and a penalty fine of $1,500,000.

But, Cuban’s attorney Thomas Melsheimer disputes these allegations.

One of Cuban’s lawyers said that the SEC’s chief witness was lying, and portrayed the case as government overreach.

 

Cuban ”is going to stand up to them when they call him a liar, he’s going to stand up to them when they call him a cheat,” said the lawyer, Thomas Melsheimer. The government, he said, ”can’t prove a lick” of its case.

Court proceedings began Tuesday morning and could last up to three weeks.

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