Mark Cuban Charged with Insider Trading

Mark Cuban, who made his money talking Yahoo into buy Broadcast.com for $6 billion, just had charges filed against him for insider trading by the SEC (Securities and Exchange Commission). The WSJ reports:

The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.

In a PIPE transaction new shares are issued at a discount to the current trading price. An announcement of a PIPE transaction is often followed by a drop in the stock price as shareholders anticipate their stake will be diluted.

Sounds exactly like Martha Stewart. Mark is known these days for spending time in strip bars, being the owner of the Dallas mavericks, owning Landmark Theaters, a large national chain dedicated to independent films, and the HDNet cable television channel. and appearing on Dancing with the Stars. Mark’s net worth was estimated at $2.3 billion as of March 2007. Cuban also runs a Web site called Sharesleuth.com, which bills itself as providing "independent Web-based reporting aimed at exposing securities fraud and corporate chicanery."

The SEC wants Mark to pay back the $750,000, plus pay a fine over $2 million.