SEC's Insider-Trading Charges Could Affect Cuban's Sports Deals
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Cuban Could Face Criminal Charges If
Federal Prosecutors Pursue The Case |
Mavericks Owner MARK CUBAN, as a result of SEC charges of insider trading, "could face civil penalties and restitution that could top" $3M plus interest, according to Trebor Banstetter of the FT. WORTH STAR-TELEGRAM. The SEC alleges in a civil action that Cuban in '04 "illegally sold his investment," a 6% ownership stake, in mamma.com after "learning of a planned stock offering that would reduce the value of shares." Cuban "strongly denies" the accusations. The court could order Cuban to "refrain from any violations in the future, a move that would expose him to contempt charges if he were convicted in any additional cases." Cuban also could "face criminal insider-trading charges if federal prosecutors pursued the case," but there was "no indication" yesterday that prosecutors were investigating that. The SEC claims Cuban avoided losses of $750,000, and under the charges, Cuban "faces a fine of up to three times the amount of the loss he avoided," or about $2.3M. Banstetter notes the charges "could taint Cuban's business deals," including his bid to purchase the Cubs, Wrigley Field and a 25% stake in CSN Chicago from Tribune Co. (FT. WORTH STAR-TELEGRAM, 11/18). In N.Y., Peter Lauria reports "much of the SEC's case rests on e-mail and telephone conversations" between Cuban and former mamma.com President & CEO GUY FAURE, who is not named in the suit but was in his position at the company "at the time of the stock offering in question." Some legal experts were "surprised that the SEC's civil suit wasn't accompanied by criminal charges" from the Department of Justice (N.Y. POST, 11/18).
TAKING THE CHARGE: Fox Business’ Tracy Byrnes said, “If you look at it black-and-white, it’s completely insider trading. The only thing that he has going for him is the fact that he is this loose cannon maverick and maybe he can prove (the stock sale) was a knee-jerk reaction and he didn’t know.” Layfield Energy CEO John Layfield: “They want to hang somebody in this (economic) environment, a guy like Mark Cuban. They’re going to hold him up as the billionaire bad guy and they’re going to try to hang him” (“Cavuto,” Fox Business, 11/17). Forbes Senior Editor Matt Miller: “Doesn’t the SEC have anything better to do with its time? … It really feels to me like a rich hunt, not a witch hunt” (“CNBC Reports,” CNBC, 11/17). SPORTINGNEWS.com's Mike Florio wrote Cuban "would be wise to do the anti-maverick thing and work out a deal" with the SEC. Florio: "There's no middle ground here. Either Cuban is clearly right, or he's clearly wrong. With the prospect of prosecution still looming, Cuban had better hope that he can back up his claims." But the "smarter course would be to simply cut a check" (SPORTINGNEWS.com, 11/17).
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SEC's Insider-Trading Charges Could Adversely
Affect Cuban's Bid To Buy Cubs, Wrigley Field |
HOW WILL THE WIND BLOW? Tribune Co.'s Petruno & Sachdev report the SEC suit "could complicate Cuban's offer" for the Cubs by "raising questions about whether other baseball team owners would approve him as an owner." Cuban's attorney, CHRISTOPHER CLARK, said that the insider-trading charges "should not hurt Cuban's involvement in the Cubs sale because the two matters weren't connected." But Petruno & Sachdev note if the charges do "eliminate Cuban from the Cubs auction, his absence would be the latest setback for the sale process that began" when Tribune Co. Chair SAM ZELL acquired the company in April '07. Cuban's absence would "further alter the dynamics of the auction, as rivals feared he would try to win the team and Wrigley Field at any cost" (L.A. TIMES, 11/18). In N.Y., De La Merced & Norris note the charges "could pose a problem for his dreams of a burgeoning sports empire." Cuban is "widely reported to be the lead bidder" for the Cubs and related assets, but the suit "may only make his quest for the baseball team more difficult to fulfill" (N.Y. TIMES, 11/18). The CHICAGO TRIBUNE's Ameet Sachdev notes there "already was doubt whether the baseball owners" would approve Cuban's acquisition. Smith College sports economist ANDREW ZIMBALIST said, "The charges give the commissioner's office another pretext for turning him down" (CHICAGO TRIBUNE, 11/18). Former Chicago Sun-Times columnist Jay Mariotti: “The timing could not be worse for Cuban in regard to getting the Chicago Cubs because there are certain (MLB) owners who have just been waiting for anything, any reason, to rub Cuban out of the picture for the Cubs” (“Around The Horn,” ESPN, 11/17). ESPN legal analyst Lester Munson added, “It comes at a very bad point in Cuban's attempt to buy the Chicago Cubs. (MLB) owners could easily use these charges as ammunition against him if they try to stop him from purchasing the Cubs" (“SportsCenter,” ESPN, 11/17). The WALL STREET JOURNAL's Scannell, Eaton & Simon cite opposing Cubs bidders who claimed that Cuban "appears to have been unable so far to raise the funds to back" his reported $1.3B offer. By late last week, "word was circulating among them that he had dropped out of the running." Cuban last Friday "declined to comment on his efforts to buy the team" (WALL STREET JOURNAL, 11/18).
MAVERICKS IMPACT: SI.com's Michael McCann wrote the NBA will "probably not" discipline Cuban, because he has "not yet been found liable of breaking any laws." However, Cuban's relationship with NBA Commissioner DAVID STERN may "influence whether the NBA takes action," as the two "have not always hit it off" (SI.com, 11/17). NBA officials were unavailable for comment on the situation (Pittsburgh TRIBUNE-REVIEW, 11/18). ESPN’s Tony Kornheiser: "I don't really know about how it’s going to affect the Mavericks because of his dicey relationship with David Stern. But it seems to me that this is something that can be adjudicated in court. It's a civil matter. It shouldn’t have any effect with his ownership of the Mavs.” ESPN’s Michael Wilbon: “It doesn't seem like it will affect the Mavericks. The Cubs (are) another story” (“PTI,” ESPN, 11/17). ESPN.com's J.A. Adande wrote the NBA "needs more owners like Cuban, not less of him," and even if Cuban "lost this case he wouldn't be a criminal, because this is a civil suit." The NBA, "ever sensitive to perception, might have to break with its pattern of staying out of civil matters and do something serious." But in the wake of the gambling scandal surrounding former NBA referee TIM DONAGHY and "in the midst of an economic meltdown, the last thing anyone in the NBA needs to be connected to is something that smacks of inside info and stock market manipulation." It could be that "Cuban's -- and the NBA's -- punishment is the timing of this announcement" (ESPN.com, 11/17).
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Some Wonder How Relationship Between Stern,
Cuban Will Impact NBA's Handling Of Situation |
BLACK EYE FOR NBA: YAHOO SPORTS' Adrian Wojnarowski writes under the header, "Owners' Boorish Behavior Tarnishes NBA." Cuban is "threatening to become one more cautionary tale of greed and carelessness in the NBA." He has "probably lost his chance to buy" the Cubs, and unless he is cleared of the charges, he has "lost his moral authority on a lot of issues." For a league whose "black players are judged as harshly as any athletes in any sport, the NBA has been run by owners whose bad behavior and bad judgments are too seldom scolded." Clippers Owner DONALD STERLING is "notorious for trying to cheat his fired coaches out of money" and he has "had to pay millions in housing discrimination settlements." Lakers Owner JERRY BUSS in '07 was arrested for a DUI, MSG Chair JAMES DOLAN last year was found liable as part of former Knicks exec ANUCHA BROWNE SANDERS' sexual harassment case and Thunder Owner CLAY BENNETT and his partners have been "exposed as fibbing carpetbaggers in Seattle with big mouths and brazen emails." The "most insufferable owner has to be" the Hornets' GEORGE SHINN, who in '99 was charged in a sexual assault case. Yet the NBA "doesn't air-brush Shinn's past, just ALLEN IVERSON's tattoos." Until Cuban "beats the government rap," he is "one more scar for the sport" (SPORTS.YAHOO.com, 11/18). Meanwhile, a DALLAS MORNING NEWS editorial states it is "hard to believe that a man as smart and rich" as Cuban would "put so much at risk to save $750,000." But "greed can make you stupid" (DALLAS MORNING NEWS, 11/18).
PARTY LIKE A ROCK STAR: In N.Y., Piazza & Goldiner report Cuban Saturday night was at McFadden's bar in Manhattan, where a source said that he "played bartender for some women and even hopped up on the bar to pour the shots into their mouths." The source said, "He was enthusiastic. We made a whole bunch of girlie shots for him to give out to female customers, and he was serving all the girls." Cuban left the bar around 2:00am ET, saying that he was "going back to his penthouse" in Trump Plaza (N.Y. DAILY NEWS, 11/18).
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