By Trace Schmeltz | As just one example of what The GEE Blog hopes to accomplish, we want to spend a moment talking about an old subject—the Securities and Exchange Commission’s insider trading case against Mark Cuban—and Cuban’s new business venture that has resulted from that case. The case, the SEC’s handling of the matter, and Cuban’s reactions (then and now) say a lot about how “the G” does business and may even be revelatory in the future. As you recall, the SEC charged Cuban with insider trading in 2008. The case was originally dismissed by the trial court. The Fifth Circuit Court of Appeals reinstated the case, concluding that the inquiry into whether Cuban had, in fact, traded on the basis of material, non-public information was simply too fact-intensive for the trial court to have decided without a full factual inquiry. This, of course, is the problem with fraud-based government enforcement: the question of a person’s intent is difficult to determine without an expensive factual inquiry—and the costs of such an inquiry (combined with the potential consequences) are so high that many people settle with the G rather than seek to exonerate themselves. Historically, the SEC “extorted” settlements (not our view, necessarily, see Al’s Emporium Commentary in the Wall Street Journal Online Edition as of October 19, 2010) in reliance on this heavy burden. At the heart of the SEC’s effort was the “no admit or deny” settlement. In these settlements, the SEC would recite each allegation of wrongdoing against a defendant as well as the terms under which the defendant had settled the charges. The defendant would neither admit nor deny the SEC’s allegations. Since Mary Jo White took over at the helm of the SEC in April 2013, she purportedly has set a new course, requiring that defendants must admit wrongdoing in more and more settlements—whether or not that changes the seemingly extortive nature of these cases remains to be seen. But Cuban, with his seemingly unlimited resources and non-retiring personality, would not be extorted. He fought back, all the way through trial, and won. Ultimately, a jury of Cuban’s peers concluded (among other things) that the SEC had not proven that Cuban received confidential information, that he traded on such information, or that he had acted knowingly or recklessly (with “fraudulent intent”) when trading. (See the Associated Press’ “Big Story” on October 16, 2013, which has a digital recreation of the jury verdict form). When he walked out of the courtroom, Cuban went ballistic on the SEC. See his comments on YouTube – his specific comments about the SEC are found beginning about the 50th second of the clip. “When you put someone on the stand and accuse them of being a liar, it is personal,” he said, criticizing specific members of the SEC’s staff and, generally, the SEC’s enforcement practices. Since then, Cuban has reinforced his criticism, stating: “There’s such a revolving door, and [the SEC] was run by attorneys with an attorney’s mind-set looking for their next job. It’s a résumé builder,” [Cuban] said. “No wonder they say or do whatever they damn well please. I’m like, ‘OK, I’m going to start calling them out by name.” ( WSJ’s Law Blog) Cuban isn’t stopping with these castigatory remarks. He is putting his money where his mouth is. Cuban’s latest business venture is to publicize SEC trial transcripts (which are not generally publicly available). Cuban hopes that, by publicizing trial tactics and tactics he believes are problematic, he will change the way this agency of the G does business. Stay tuned—we will let you know how he does! Indeed, in upcoming posts, The GEE Blog will further examine many of the issues raised here. Of course, we would like your thoughts and feedback, too. If you want to see The GEE Blog address an issue, let us know. Ultimately, we want The GEE Blog to be a resource you can count on.
RELATED ARTICLES
How the SEC Widens Net Over Ethereum
October 14, 2022 | The GEE Blog, SEC
Digital Asset Businesses Amp Up Their Compliance Measures to Avoid Insider Trading Actions
August 26, 2022 | The GEE Blog, Department of Justice, SEC
Is Crypto a Security? Insider Trading Case Leads to DOJ, SEC Scrutiny
July 27, 2022 | The GEE Blog, SEC, Insider Trading
Fifth Circuit Holds That SEC Administrative Law Courts Are Unconstitutional
May 23, 2022 | The GEE Blog, SEC
Will SEC Become the ‘Securities and Environment Commission?’
March 30, 2022 | Environmental, Enforcement, The GEE Blog, SEC
How the SEC Widens Net Over Ethereum
October 14, 2022 | The GEE Blog, SEC
Digital Asset Businesses Amp Up Their Compliance Measures to Avoid Insider Trading Actions
August 26, 2022 | The GEE Blog, Department of Justice, SEC
Is Crypto a Security? Insider Trading Case Leads to DOJ, SEC Scrutiny
July 27, 2022 | The GEE Blog, SEC, Insider Trading
Fifth Circuit Holds That SEC Administrative Law Courts Are Unconstitutional
May 23, 2022 | The GEE Blog, SEC
Will SEC Become the ‘Securities and Environment Commission?’
March 30, 2022 | Environmental, Enforcement, The GEE Blog, SEC
The Enforcement Climate is Changing for ESG Disclosures
January 26, 2022 | Environmental, The GEE Blog
SEC Proposes Amendments to the Requirements of Rule 10b5-1 Trading Plans
December 22, 2021 | The GEE Blog, SEC, Financial Regulation, Insider Trading
SEC Announces FY2021 Results With 7 Percent Increase in New Enforcement Actions
November 30, 2021 | The GEE Blog, SEC
How Will the SEC Drive ESG Progress? First, We Measure
August 2, 2021 | Environmental, Environmental News, SEC
ESG Investing Guidance from the U.S. Securities and Exchange Commission
July 29, 2021 | The GEE Blog, SEC
Whistleblower Awards from the U.S. Securities and Exchange Commission
May 24, 2021 | The GEE Blog, SEC
SEC Emerges as Main Regulator of Cryptocurrency
May 14, 2021 | The GEE Blog, Financial Regulation, SEC
SEC Whistleblower Program Continues Record-breaking Performance Amid New Chair's Support
April 28, 2021 | The GEE Blog, SEC
Gary Gensler to Lead SEC
April 16, 2021 | The GEE Blog, SEC
Half a Loaf: Congress Extends the Statute of Limitations on Some SEC Remedies
January 14, 2021 | The GEE Blog, SEC
SEC Again Highlights Risks of Investing in Chinese Securities
December 3, 2020 | The GEE Blog, SEC, Financial Regulation
SEC Steps Up Enforcement for Unsuitable Sales of Complex ETPs
November 18, 2020 | The GEE Blog, Financial Regulation, SEC
President’s Working Group Attempts to Increase Transparency in Chinese Investments
September 2, 2020 | The GEE Blog, SEC
SEC Highlights COVID-Related Risks Facing Broker-Dealers and Investment Advisers
August 31, 2020 | The GEE Blog, SEC, Financial Regulation
SEC Adopts Rule Amendments Regarding Proxy Voting Advice
July 29, 2020 | The GEE Blog, SEC
SEC Hosts Roundtable to Discuss Risks Associated With U.S.-Listed Chinese Companies
July 14, 2020 | The GEE Blog, SEC, Financial Regulation
Supreme Court Misses Its Chance To Define Limits of SEC’s Enforcement Authority
June 30, 2020 | The GEE Blog, SEC
First-Time Supreme Court Advocate Appointed to Argue the SEC’s Case in Lucia
January 23, 2018 | SEC, The GEE Blog
SEC’s Appointments Clause Dilemma Gets Worse
January 16, 2018 | SEC, The GEE Blog
SEC Scrutiny Brings Sanity to Hot ICO Market
November 9, 2017 | SEC, The GEE Blog
Who’s Watching the Watchdog? SEC Deals With Its Own Data Breach
September 25, 2017 | SEC, The GEE Blog
Don't Let DOJ Defections Fool You: Corporate Conduct Still in the Crosshairs
September 6, 2017 | Department of Justice, The GEE Blog
Corporate Law Alert - SEC Issues Guidance on Initial Coin Offerings and Cryptocurrencies
August 2, 2017 | The GEE Blog, SEC
SEC Chairman Announces 8 Core Principles
July 31, 2017 | SEC, The GEE Blog
U.S. Supreme Court Delivers Blow Limiting SEC Disgorgement Power
June 12, 2017 | SEC, The GEE Blog
The SEC’s Appointments Clause Dilemma
January 24, 2017 | Case to Watch, SEC, The GEE Blog
U.S. Supreme Court Decides Salman, Reaffirms Broader View of Insider Trading
December 7, 2016 | Case to Watch, Insider Trading, The GEE Blog
U.S. Supreme Court Revisits Insider Trading in Salman
October 6, 2016 | Insider Trading, The GEE Blog
SEC Changes Some of Its Procedural Rules After Constitutional Challenges
September 7, 2016 | SEC, The GEE Blog
D.C. Circuit Affirms Constitutionality of SEC’s In-House Tribunals
September 2, 2016 | SEC, The GEE Blog
Accounting Fraud Getting Increased Attention from the SEC and Class Action Counsel
April 29, 2016 | SEC, The GEE Blog
Watch What You Write, Watch What You Say
March 10, 2016 | Insider Trading, The GEE Blog
SEC Completes Municipal Underwriter “Enforcement Sweep”
February 8, 2016 | SEC, The GEE Blog
SEC Reduces Dodd-Frank Whistleblower Award for "Unreasonable Delay," Announces Policy of "More Heavily" Punishing Delay After Award Program's Implementation
November 16, 2015 | SEC, The GEE Blog
Regulation S-P Violation: Are You Prepared For A Cyber-Security Breach?
October 8, 2015 | SEC, The GEE Blog
REST IN PEACE, NEWMAN – SO WILL THE GOVERNMENT LAY DOWN IN SALMAN?
October 5, 2015 | Insider Trading, The GEE Blog
INSIDER TRADING AND ADMINISTRATIVE COURTS – MORE ON TWO HOT TOPICS THAT HAVE NOW CONVERGED
September 28, 2015 | Insider Trading, SEC, The GEE Blog
WHY NEWMAN MIGHT NOT BE HEADED TO THE SUPREME COURT
August 11, 2015 | Insider Trading, The GEE Blog
NINTH CIRCUIT SLAPS BACK REMOTE TIPPEE’S NEWMAN DEFENSE
July 15, 2015 | Insider Trading, The GEE Blog
THE BENEFITS OF COOPERATION – HYPERDYNAMICS AVOIDS INDICTMENT
May 29, 2015 | FCPA, The GEE Blog
THE SEC EXPLAINS ITS RATIONALE IN FORUM SELECTION IN CONTESTED CASES
May 26, 2015 | SEC, The GEE Blog
THE SEC EXPLAINS ITS RATIONALE IN FORUM SELECTION IN CONTESTED CASES
May 22, 2015 | SEC, The GEE Blog
Self-Reporting: A Wise Strategy or Chasing Unicorns?
April 28, 2015 | SEC, The GEE Blog
Recent Enforcement Trends in the Commodity Markets (Part 1)
April 13, 2015 | Financial Regulation, The GEE Blog
Uniform Fiduciary Standards on the Horizon for Brokers and RIAs
April 10, 2015 | SEC, The GEE Blog
“HELLO, NEWMAN” -- GOVERNMENT CONTINUES TO LITIGATE REVERSED INSIDER TRADING CONVICTIONS
March 9, 2015 | Insider Trading, The GEE Blog
M&A DUE DILIGENCE FAILURES: FCPA & GOODYEAR
February 27, 2015 | FCPA, SEC, The GEE Blog
PART I - CORRUPTION ENFORCEMENT IN BRAZIL: WHAT DOES IT LOOK LIKE?
February 23, 2015 | SEC, The GEE Blog
Chasing the Gatekeepers
January 22, 2015 | SEC, The GEE Blog
CRIMINAL INSIDER TRADING CONVICTIONS OVERTURNED IN FAR-REACHING RULING
December 23, 2014 | Insider Trading, The GEE Blog
DODD-FRANK WHISTLEBLOWER ACTIVITY GETTING EVEN HOTTER
September 23, 2014 | SEC, The GEE Blog
DODD-FRANK WHISTLEBLOWER LITIGATION HEATING UP
September 10, 2014 | SEC, The GEE Blog
Foreign Corrupt Practices Act - Keeping the Wolf at Bay
September 5, 2014 | FCPA, The GEE Blog
Regulators And Prosecutors Discuss Securities and Commodities Enforcement Priorities
August 15, 2014 | SEC, The GEE Blog
JUDGE RAKOFF CONTINUES TO QUESTION ADEQUACY OF JUDICIAL OVERSIGHT OF SEC
August 7, 2014 | SEC, The GEE Blog
Reader Responds to Recent Law Judge Blog Post
July 21, 2014 | The GEE Blog, SEC
The Gabelli Effect: How the Supreme Court’s Decision is Impacting Enforcement Actions
July 16, 2014 | SEC, The GEE Blog
The Acquittal of Rengan Rajaratnum: A Precursor for Acquittals or No Action in Other “Remote Tippee” Cases?
July 15, 2014 | Bank Securities Fraud, The GEE Blog
REDUCING THE COST OF FCPA MONITORING
June 11, 2014 | Bank Securities Fraud, The GEE Blog
BELATED VINDICATION FOR THE SEC’S (PRIOR) SETTLEMENT POLICY
June 6, 2014 | Bank Securities Fraud, The GEE Blog
“Gatekeepers” Beware: A New Tool of the SEC
June 4, 2014 | Bank Securities Fraud, Financial Regulation, The GEE Blog
District Court Bolsters the Five-Year Statute of Limitations Defense to SEC Civil Enforcement Actions
May 20, 2014 | Bank Securities Fraud, The GEE Blog
Is the Second Circuit About to Put the Brakes on the Government’s Pursuit of Insider Trading “Tippees”?
April 29, 2014 | Insider Trading, The GEE Blog
Disgorgement in the Second Circuit: Equitable Relief or Punishment?
April 15, 2014 | Bank Securities Fraud, The GEE Blog
Alert: SEC creates team to examine private equity and hedge funds
April 9, 2014 | The GEE Blog
Case to Watch – Chadbourne & Parke LLP v. Troice – Has the Supreme Court undermined the misappropriation theory of insider trading?
March 29, 2014 | Case to Watch, Insider Trading, The GEE Blog
Heightened SEC/DOJ FCPA Standards Offer Risks and Opportunities to Companies and Their Lawyers
March 18, 2014 | Financial Regulation, The GEE Blog
Is the FTC The Latest Weapon of Aggressive Short Sellers?
March 17, 2014 | Government Investigations, The GEE Blog
Top 10 Takeaways from ABA White Collar Crime Conference 2014 (Part 2 of 2)
March 13, 2014 | Government Investigations, The GEE Blog
Top 10 Takeaways from ABA White Collar Crime Conference 2014 (Part 1 of 2)
March 12, 2014 | Government Investigations, The GEE Blog
SEC’s New Priorities Continue to Come into Focus: Admissions of Liability
March 11, 2014 | Bank Securities Fraud, The GEE Blog
The SEC and Its “Strange Bedfellows” Argue Against Investors Seeking Damages for Fraud – Are Rebuffed by the Supreme Court
March 3, 2014 | Bank Securities Fraud, The GEE Blog
The CFTC: Armed and Dangerous
February 13, 2014 | Financial Regulation, Government Investigations, The GEE Blog
DOJ Wins Big Insider Trading Case: Martoma Conviction; Bad News for Cohen and SAC
February 8, 2014 | Insider Trading, The GEE Blog
SEC Continues to Struggle in Insider Trading Jury Trials
February 7, 2014 | Insider Trading, The GEE Blog
Securities Regulators’ Increasing Use of Real-Time Monitoring Systems - Is Skynet Next?
January 31, 2014 | Financial Regulation, Government Investigations, Insider Trading, The GEE Blog
Going South: What U.S. Companies Need to Know About the FCPA and Doing Business in Latin America
January 30, 2014 | Criminal Procedure, Government Investigations, The GEE Blog
Welcome to The GEE Blog
January 18, 2014 | The GEE Blog
Barnes & Thornburg Legal Alert - Government Regulators Continue to Make Insider Trading a Trial Priority
January 16, 2014 | Financial Regulation, The GEE Blog
SEC Highlights 2013 Accomplishments and Outlines 2014 Enforcement Priorities
January 2, 2014 | Financial Regulation, The GEE Blog
RELATED PRACTICE AREAS
Subscribe
Do you want to receive more valuable insights directly in your inbox? Visit our subscription center and let us know what you're interested in learning more about.
View Subscription Center