I have been following the Mark Cuban insider trading story since it erupted. Judging by the email Cuban received from an SEC employee this could be a case of attempted payback for either his involvement with Bailout Sleuth or the documentary "Loose Change", or both.
A person close to Mr. Cuban provided what he said was one of a series
of e-mail messages from Jeffrey B. Norris, an S.E.C. lawyer in Fort
Worth, who accused the billionaire of being unpatriotic for helping to
finance a movie named “Loose Change.”
In the e-mail message, Mr. Norris described the movie as a “vicious and
absurd documentary” that “posits that President Bush planned the
demolition of the World Trade Center as a pretext for going to war
In the e-mail message, sent from his S.E.C. e-mail address, Mr. Norris
said he was informing Christopher Cox, the chairman of the S.E.C., of
Mr. Cuban’s actions.
“If this upsets you, I wonder how George
Bush feels,” Mr. Norris wrote. “I assume that Mr. Cox would view your
involvement with ‘Loose Change’ much as I do. After all, he served his
country as a Republican congressman from Orange County for nearly 20
years and was appointed by President Bush.”
Update 12/19, 1:00 AM: Some
alert readers have pointed out in comments that the SEC's case is not
as airtight as the press reports suggest. It is not clear that Cuban
was an insider. He was not an officer or a director, nor was his stake
large enough for him to be deemed to have controlling influence. Thus
it is not clear he had any fiduciary duty to the company. Just because
the CEO told Cuban not to act on the information did not mean he had
the authority to do so. And if Cuban was not an insider, there was no
SEC violation. (Source)
This story serves as yet another painful reminder that the SEC continues to ignore the whole issue of insider non-trading. What is insider non-trading, you ask? Well, it's insidious and works like this. Suppose Bob is a manager at a public company. One weekend, he and his wife decide to sell off 10,000 shares that they hold in his employer's company in order to put together a down payment on a rental property. On Monday morning Bob plans to call his broker to place the sell order. However, just minutes after arriving at work a friend from the sales department drops by his office and informs him that company will be announcing its biggest sale in history shortly. It's a sale which will at a minimum double annual revenues and send the stock price soaring. The salesman tells Bob that he's going to use his stock to buy a Ferrari.
After thinking about it for a few minutes, Bob decides to hold off on the sell order.
That, in a nutshell, is insider trading.
One has to wonder, why if the SEC is wasting time going after people like Mark Cuban in the midst of the biggest financial debacle in history, one which has the potential to sink the economy into a deep and prolonged recession--if not depression--it isn't going after the inside non-traders as well.