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SEC Accused of "Gross Abuse of Prosecutorial Discretion"

By Mark H. Astarita, Esq.

That sounds serious, but given the context and timing of the allegation, maybe not. The accusation comes from Mark Cuban, the billionaire owner of the Dallas Mavericks, in response to an SEC complaint charging him with insider trading.Cuban was the founder of Broadcast.com, which he sold to Yahoo! for some 6 billion dollars back in the Internet stock heyday.The underlying allegations occurred in 2004 (does the SEC know that it is 2008? Where they heck have they been for 4 years? They get 4 years to investigate, Cuban will get 30 days to respond. Great system we have).The complaint alleges that Cuban had a 6% stake in search engine Mamma.com, and was approached by the CEO of Mamma to purchase additional shares in a PIPE offering. According to the complaint, which goes to great pains to repeatedly allege that Cuban was told the information was confidential, Cuban became angry during the conversation, because, according to the SEC, PIPEs dilute existing shareholders and told the CEO, "Well now I am screwed...continue to full post

Full post as published by SECLaw.com on November 18, 2008 (boomark / email).