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Jury says Cuban did not commit insider trading

miamiherald.com

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Re: Jury says Cuban did not commit insider trading

#41

Post by satori99 »

dkl wrote: post #17
lawnchair_larry wrote: post #10

Earlier quoted context omitted.

How do you figure this was SEC bullying? Looks like a clear cut case of insider trading to me.

I'm surprised to find not one defense of Mark like there was in the original thread a few weeks ago, when the trial started. At that time, there were a bunch of people with very specific arguments why it wasn't insider trading. I don't remember the specifics, but I remember reading and I found them interesting.

IIRC it was to do with Cuban never having agreed to receive the information in confidence.

Re: Jury says Cuban did not commit insider trading

#42

Post by hristov »

baddox wrote: post #38
hristov wrote: post #18

Earlier quoted context omitted.

It is not a victim-less act. The person that goes into a transaction without knowing insider information usually believes they were cheated. Quite rightfully so. Your first point is wrong as well. If insider trading were legal there would be a huge incentive for insiders to keep inside information away from the public. This would lead to slower dissemination of inside information. It would also lead to great economic…

> If insider trading were legal there would be a huge incentive for insiders to keep inside information away from the public. Could you explain this claim?

Say you are an executive of a company and learn of certain piece of inside information which will affect the stock price. Say, for example your company just got a new order that will double their profits. If insider trading were permitted you would try to keep this piece of info secret for as long as possible to give you time to buy as many shares as you can. After you buy all you can you will probably want tip off your friends and family to buy all they can. All this takes time, so you would want to keep this secret for as long as possible.

If insider trading is illegal you will want to announce this news as quickly as you can so that your company is viewed as being transparent and shareholder friendly.

Re: Jury says Cuban did not commit insider trading

#43

Post by smalter »

rosser wrote: post #11

The jury didn't say he "did not commit insider trading"; they said the government didn't prove that he committed insider trading . They didn't say he's innocent of the charges, but that he's not guilty of them. There's an important difference between the two.

this comment is really off point.

there's no guilty/not guilty/innocence distinction here because this wasn't even a criminal case, it was a civil case.

in addition, the statement "the government didn't prove insider trading" is tantamount to the statement "mark cuban did not commit insider trading" because the case boiled down to a disputed question of fact, and what actually happened is unknowable.

Re: Jury says Cuban did not commit insider trading

#44

Post by hristov »

dreamdu5t wrote: post #21
hristov wrote: post #18

Earlier quoted context omitted.

It is not a victim-less act. The person that goes into a transaction without knowing insider information usually believes they were cheated. Quite rightfully so. Your first point is wrong as well. If insider trading were legal there would be a huge incentive for insiders to keep inside information away from the public. This would lead to slower dissemination of inside information. It would also lead to great economic…

Cheated of what? Owning a share does not entitle you to profit. I fail to see what's amoral about trading based on information that other people don't know. There are no two people who know the exact same things. All trade is based on asymmetric information.

"I fail to see what's amoral about trading based on information that other people don't know."

Seeing as how you are moving the goalposts now you probably see very clearly what is amoral about insider trading.

Re: Jury says Cuban did not commit insider trading

#45

Post by lawnchair_larry »

shreyansj wrote: post #14
lawnchair_larry wrote: post #10

Earlier quoted context omitted.

How do you figure this was SEC bullying? Looks like a clear cut case of insider trading to me.

How do you figure this is clear cut case of insider trading. What's your evidence to reach that verdict, that the jury apparently failed to see?

I can't speak for the jury.

Perhaps if you disagree that it's "clear cut", you at least agree that it was plausible. It wasn't simply bullying, that seems certain.

His defense was not that he didn't trade based on a tip, but that he never agreed to keep the tip confidential, and he challenged the definition of what an insider is.

This is a technicality. That's the problem with insider trading laws - "insider" isn't really defined. So, although it's often common sense and most people can make a judgment call on the spirit of the law, this often won't be sufficient for a trial. Still, this doesn't mean the SEC is wrong to pursue such cases.

Re: Jury says Cuban did not commit insider trading

#46

Post by maxerickson »

RobAtticus wrote: post #32
dreamdu5t wrote: post #21

Earlier quoted context omitted.

Cheated of what? Owning a share does not entitle you to profit. I fail to see what's amoral about trading based on information that other people don't know. There are no two people who know the exact same things. All trade is based on asymmetric information.

Should I be allowed to sell you a car that's a lemon just because you cannot see that? If I know the engine is about to die, but you test drive it and it seems fine, is that really right?

Most private car sales are just like that.

Re: Jury says Cuban did not commit insider trading

#47

Post by smalter »

hristov wrote: post #8

He got off because it was ultimately a question of his word against the word some other guy. And the other guy had an axe to grind. And Cuban is very popular in Dallas, being the owner of the local basketball team. So the jury decided there is not enough evidence to indict. But if I were Cuban I would not complain to loudly about being hounded by the SEC. Fact of the matter is his selling right before the PIPE was an…

it appears to me that you're misunderstanding the case.

cuban's argument wasn't that he was lucky or the timing of his sale was a coincidence--nobody thinks that was the case--his argument was that he never agreed not to trade on the confidential information.

Re: Jury says Cuban did not commit insider trading

#48

Post by lawnchair_larry »

rverghes wrote: post #34
lawnchair_larry wrote: post #10

Earlier quoted context omitted.

How do you figure this was SEC bullying? Looks like a clear cut case of insider trading to me.

This is a pretty good overview of the case for Cuban: http://www.professorbainbridge.com/professorbainbridgecom/20... Apparently, simply owning stock is not enough to make you an "insider". You have to be a fiduciary (i.e. be an officer, or a controlling shareholder, or on the board, or similar), or owe a fiduciary duty to the company.

This is a good overview, but a few things to note:

- Cuban was the largest shareholder

- Cuban was told that the company planned to offer a deal that allowed for more purchases at a 10% discount, diluting his stock. He was told this before the public announcement, and sold his stock the day before the public announcement.

None of this was really disputed. What was disputed was whether or not Cuban had a conversation that acknowledged he was an insider and that he couldn't sell, and whether or not there was an implied confidentiality agreement. This would suggest admission of guilt as well as satisfy the "misappropriation" definition of insider in the article you linked, since they couldn't satisfy the fiduciary definition.

So, he traded based on non-public, adverse information, and saved himself from a substantial loss. Despite this, the SEC failed to convince the jury that he fit any formal definition of "insider".

I think we can all agree that whoever bought all of his stock prior to the public announcement of the dilution did not have his advantage, and his advantage came solely from a position of privilege within the company.

Re: Jury says Cuban did not commit insider trading

#49

Post by lawnchair_larry »

baddox wrote: post #37
rosser wrote: post #11

The jury didn't say he "did not commit insider trading"; they said the government didn't prove that he committed insider trading . They didn't say he's innocent of the charges, but that he's not guilty of them. There's an important difference between the two.

It's an invented difference that has no observable (as in, non-semantic) manifestations. As far as his legal treatment from here forward, he "did not commit insider trading" to the same extent that my grandmother (who has done no trading whatsoever and has never been accused of such) "did not commit insider trading."

Most people don't discuss things in terms of their strict legal definition, but in terms of what actually happened. Your comment suggests that I could steal a car, but I am not any more of a car thief than your grandmother until I get caught and convicted. I may not be a Car Thief, but I'm a car thief, which is what really matters.

Re: Jury says Cuban did not commit insider trading

#50

Post by RobAtticus »

maxerickson wrote: post #46
RobAtticus wrote: post #32

Earlier quoted context omitted.

Should I be allowed to sell you a car that's a lemon just because you cannot see that? If I know the engine is about to die, but you test drive it and it seems fine, is that really right?

Most private car sales are just like that.

Hmm, surprising. Could have sworn you had at least some reasonable protections that you could sue if the owner knew of problems but failed to disclose them.
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