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| Cuban's Shame |
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You might have heard about Dallas Mavericks owner, media owner, and dotcom lotto winner Mark Cuban's alleged case of insider trading by the SEC. If not, I made reference to in a recent piece I did called "SEC Shame." Now it's Cuban's turn to shine.
According to the SEC, Cuban was involved in insider trading when he sold his 600,000 shares (6.3% stake) of a company after receiving confidential information about a private offering in 2004, avoiding a loss of $750,000.
 The defense from Cuban’s legal team are two-fold. First, they deny the allegations. Next, they insist that even if they were true, they claim Cuban "didn’t engage in insider trading because he wasn’t legally an 'insider."
According to Cuban's legal team "Supreme Court decisions make it clear that an 'insider' is someone who had a pre-existing fiduciary duty or similar relationship with a company. Because Cuban was simply an investor who allegedly promised confidentiality during a phone call."
This has got to be the most ridiculous defense ever made be a legal team hired by a billionaire accused of insider trading charges.
Let me explain. You see, Cuban's attorneys are playing word games, typical of attorneys, used car salesmen and other shady characters who always want to justify deceitful or unlawful activities. The fact is that one is not required to be an insider in order to engage in insider trading. Insider trading can occur by one of two means.
First, if one is an insider, the means by which insider trading is thought to have occured should be obvious. It relates to the utilization of private information for financial gains or to avoid losses.
But insider trading can also occur by non-insiders. In fact, this is the most common form of insider trading. Anyone (including you or me) who receives information that is deemed to be from a credible source (such as an insider) and who acts upon this information in order to gain in some way financially is guilty of insider trading. It's that simple.
However, as I mentioned in a previous article, either way Cuban wins because the SEC is one big hypocrisy. Furthermore, Cuban could have (although he was not) indicted for criminal charges in addition to civil charges. Ask yourself what the difference was between what Cuban did versus what Martha Stewart did a few years back.
Stewart was not an insider but she did engage in insider trading. In fact, I could argue that Cuban's insider trading was more direct and blatant since he was informed of insider information through a direct conversation with executive management.
In contrast, Stewart spoke with her broker, who informed her of the adverse results of a drug study for one of the company's (ImClone) drugs and the subsequent liquidation of shares by the company's CEO, who was also a client of Stewart's broker.
 When Stewart was convicted, David Kelley, U.S. attorney for the Southern District of New York, said outside the courthouse....."The word is -- beware -- and don't engage in this type of conduct because it will not be tolerated."
Well, Mr. Kelley, it looks like we will have to see about that.
You should realize by now that rich and/or powerful people never go to jail in America. In Stewart's case, she spent only a short time at Club Fed. And she only went to prison to distract from the massive fraud during the dotcom charade. How many criminals responsible for that charade went to prison?
As a "lotto winner" from the dotcom bubble, Cuban received over $1 billion for selling his company that generated only $13 million in revenues. Yet, despite this free money (compliments of Yahoo! shareholders and the stupidity of executive management), it's disgusting that Cuban feels the need to cheat the system. Oh well, one could counter that he learned to cheat from the NBA. After all, most of the games are fixed.
Some of you may not realize it but Cuban has sizable media investments. Despite his fortune, his direct involvement with media companies and his everso endless thirst for attention, Cuban's efforts to gain media attention (other than by being an ass) have been embarrassing.
 As part of his attempts to fill what could be some childhood attention-deficit issues, Cuban’s antics lead to huge fines levied by the NBA on a regular basis. And then there’s the constant bashing of other digital media companies like YouTube, MySpace and others.
In 2006, Cuban was quoted as saying that only a “moron” would buy YouTube. Cuban should know about terrible media deals. It was Yahoo!'s ridiculous buyout that made him a billionaire. While I agree that YouTube certainly isn't worth the $1.6 billion Google paid for it, the fact is that Cuban often oversteps his reach, especially when it comes to business and investment issues. He is always giving such advice which would be fine if it was valuable. In my opinion, the man is no business or investment guru as he would like his obedient fan club to believe. Although, perhaps compared to them he is.
He even raised ridiculous claims about Bernie Madoff after the Ponzi scheme was exposed, saying “they should look at the software” as if that would be the key to the entire scheme. If Cuban had bothered to read the details of the scheme, the software was so antiquated that it frequently printed securities statements showing purchases and sales for stocks at prices that did not even trade in that range on the stated date.
Of course Cuban, the "expert in everything" stuck his foot in his mouth once again when he made blanket claims that the SIPC would recover Madoff's victims
"the Madoff investor had less than $500k invested, there is a good chance that they could be protected by the SIPC, who is already sending out claim forms. So when its all said and done, the Madoff investor could not only get all their $250k back, but they are also elgible for a share of any funds recovered. While that number may be miniscule, it could mean that SIPC elgible and paid Madoff investors actually made money over the 10 year period, while those that put their money in the market got hit very hard."
I am wondering what Cuban was smoking when he came up with these ridiculous statements. Once again, Cuban speaks before truly understanding what is going on. But when you have an audience full of sheep, they will believe everything you say.
The fact is that the SIPC rules and regulations are not so clear-cut. In the best of situations, investors have often waiting for a very long time before recovering their assets from failed financial institutions. Furthermore, if Cuban had bothered to do some research, you would have seen that it is unlikely that Madoff victims will be covered under the SIPC.
The countless trash Cuban preaches on his blog soapbox is only rivaled by the astonishingly low level of intelligence from the readers of his blog.
But much of Cuban’s ego arises from his Kool-Aid-drinking lackeys who worship him as he spews his latest wisdom on his blog. But you need to understand that he lives in Texas, so you aren’t going to have much intelligence there. Furthermore, the truck-driving, trailer trash will worship him simply for the fact that he is wealthy.
As cheesy as Donald Trump is, I respect the man more than Cuban. It appears as if Cuban is a bit jealous of Trump's ability to succeed on TV. What Cuban is too naive to realize is that television success is only possible if you are a liar, idiot or cheeseball.
 Now, I don't think Cuban is a cheeseball and I don't think he is a liar (one who lies often, as opposed to one who has or is currently lying), but I do think he is an immature idiot.
According to his own admission, Cuban started a chain letter while in college. Chain letters (with rare exception) are illegal and are considered along the lines of a Ponzi scheme. There is good reason to question Cuban's character.
Incidentally, I find it interesting that Cuban is Jewish.
 "Mark was always the type of guy who was never afraid to take risks or do something different," said Todd Reidbord, president of Shadyside-based Walnut Capital and one of Cuban's friends from Mt. Lebanon High School.
Yes, I'm sure you can appreciate his appetite for risk. As far as doing "something different," insider trading is neither rare nor unique. In fact it happens many times every single day.
In my opinion, the real shame for Cuban is not that he (allegedly) took advantage of confidential information but that he actually allowed his legal team to use such a laughable argument that he's not guilty of insider trading because he wasn't an insider.
Mr. Cuban, I suggest you fire your legal crew, admit to your mistake, pay your fine, thank God that you have no criminal charges from the SEC, and move on.
Oh and by the way, you need to start doing some research before you spew out so much trash; that is, if you ever want any respect those of us who haven’t won the lotto.
And if you want to be respected by your “financial peers,” you might consider acting your age rather than the IQ of your blog readers.
After another embarrassing post-season playoff performance and some major issues with your star player (which could forever change his performance) I'd say you need to figure out how to salvage your team.
All that aside, I the SEC has many bigger fish to fry. And to waste time with this case right now merely serves as a publicity smoke-screen to hide the many failures at the SEC.
Mark, if you are innocent than I hope you are found innocent. If you are guilty, I hope to never read or hear you criticize others for fraud. Otherwise, people might start calling you Henry Blodgett.
NOTE: I continue to face widespread censorship for the cold hard truth I speak, as I see it. My intention is to wake the people up so they will realize just how useless and deceitful the mainstream media is. I ask that you do your part to help with this mission by emailing my articles to your friends and adding them to the various online syndication options provided at the top right-hand side of each article. Together, we can make a difference.
Copyright © 2008-2011. Mike Stathis. All Rights Reserved. 
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