When the Securities and Exchange Commission announced that it had charged Mark Cuban, owner of the Dallas Mavericks and one of the richest people in America, with insider trading involving shares of Mamma.com, there was an immediate wave of skepticism.
Even Gary Weiss, a long-time critic of Mr. Cuban, wasn't convinced. He wrote that "According to the SEC, Cuban became an 'insider' because the CEO of the company told him about an upcoming PIPE deal. Does that mean that if I own shares, a CEO can make me an 'insider' by calling me and blurting out some inside information? . . . Here's what I wonder: if this case is as open and shut as the SEC makes it out to be, why did it take four years to bring charges?"Then Cuban followed that up by blasting the charges on his blog, suing the SEC for denying him access to documents, and gaining the support of several legal experts who said Cuban didn't qualify as an insider.
Now U.S. District Judge Sidney A. Fitzwater has granted Cuban's motion to dismiss the charges against him. While the SEC has 30 days to file an amended complaint, this is a very, very rare setback for the SEC -- which is almost always able to quickly settle any charges it brings.
It's too soon to know what the SEC will do, but here's hoping it gets a life -- and start cracking down on actual fraud, instead of pursuing pointless cases against billionaires who avoid losing a few hundred thousand dollars by selling stock in a company most people have never heard of.
The SEC could start by reading this blog post from Fox Business anchor Cody Willard -- and take a good hard look at the disclosures being produced by Goldman Sachs (GS).