U.S. District Judge Sidney A. Fitzwater of the Northern District of Texas has handed Dallas businessman Mark Cuban a big win. In a 35-page order today, Fitzwater dismissed an insider- trading suit the U.S. Securities and Exchange Commission filed in 2008 against Cuban, the feisty owner of the Dallas Mavericks. Fitzwater granted Cuban’s motion for summary judgment on the ground the SEC failed to prove, under the misappropriation theory of insider-trading liability, that Cuban engaged in insider trading. He dismissed the complaint against Cuban in Securities and Exchange Commission v. Mark Cuban. In the complaint, the SEC alleged Cuban sold 600,000 shares of Mamma.com Inc. stock just hours after the company’s then-chief executive officer told him confidentially that the company planned to raise money through a private placement known as a private investment in public equity (PIPE) offering. Kevin O’Rourke, an SEC attorney based in Washington, D.C., who is the lead attorney for the government, could not be reached for immediate comment. An attorney for Cuban, Paul Coggins, a principal in Fish & Richardson in Dallas, says Fitzwater made the right call and wrote a “stellar opinion.” He says Cuban maintains he didn’t violate the law. “We felt the judge had the law right,” Coggins says. “But a motion to dismiss is always a long shot. We thought we had a strong case on the law and a strong case on the facts but the judge knocked it out on the law.” He says Cuban declines comment because Fitzwater gave the SEC 30 days to file an amended complaint. Coggins notes that the SEC could also appeal the Memorandum Order and Opinion to the 5th U.S. Circuit Court of Appeals. In addition to Cuban, Coggins represents U.S. Sen. John Ensign, R-Nevada, who has been in the news lately because of an affair he had with a staffer. Coggins, a well-known Democrat, won’t say how he
came to represent the Republican senator.
-- Brenda Sapino Jeffreys and John Council
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