Mavericks owner accused of insider trading

In March 2007, Forbes magazine estimated Cuban’s net worth at $2.3 billion, up from around $1.8 billion near the time of the trade that’s being scrutinized by the SEC. For someone in that financial stratosphere, saving $750,000 doesn’t seem worth the risk of ruining a clean reputation.

Stern and Degenhardt said it happens all the time.

“Many times I wondered, ’Why would a person do this? They don’t need the money,”’ Degenhardt said.

Degenhardt said the SEC has been looking to make an example out of someone involved in a case just like this — a so-called private placement in public equity offering, which is known as a PIPE. He’s curious to see whether they picked the right one.

“It isn’t as if they have a tape they can play and show what transpired during those telephone calls. If they did, they would’ve played it,” Degenhardt said. “This is not like Martha Stewart, who lied to SEC staffers. This is a case where Mr. Cuban disclosed he made trades and he disclosed he made them in a timely fashion.”

The SEC also wrote that Cuban became upset and angry during the conversation with the CEO. At the end of the call, Cuban said, “Well now I’m screwed. I can’t sell.”

Cuban’s anger and defiance also were a central theme in a several-year battle over unpaid compensation for Don Nelson, who was the Mavericks’ coach and general manager when Cuban bought the club. Coincidentally, part of Cuban’s defense was that Nelson used “confidential information” to guide the Golden State Warriors to their historic upset of the top-seeded Mavericks in the first round of the 2007 playoffs.

On Sept. 10, a federal arbitrator issued a final ruling of $7.1 million on Nelson’s behalf. As of Tuesday, Cuban had yet to pay.

“This appears to be another case of ego and pride leading to activities of questionable credibility,” said John O’Connor, Nelson’s San Francisco-based attorney. “I hope for Mark’s sake the allegations are not true, in which case we’re with him 100 percent. But if they are true, he’s lucky he’s not wearing an orange jump suit.”

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