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Sept. 29, 2010

Securities Enforcement Alert: Fifth Circuit Reinstates Insider Trading Claims Against Mark Cuban

On September 21, 2010, the Fifth Circuit Court of Appeals reinstated insider trading charges brought by the Securities and Exchange Commission against Texas entrepreneur Mark Cuban, charges originally dismissed by the district court. The suit arose out of Cuban’s sale of his entire stake in Canadian internet search company Mamma.com shortly after he had received non-public information about the company’s planned PIPE stock offering. While the Fifth Circuit’s reversal turned on its more expansive reading of the SEC’s complaint, the opinion suggests a variety of cautionary notes to a trader evaluating potential insider trading issues.

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