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Does it Pay to be a Maverick When Trading Securities?

On November 17, 2008, the U.S. Securities and Exchange Commission (SEC) filed a civil complaint against entrepreneur and Dallas Mavericks' owner Mark Cuban alleging that he engaged in insider trading in 2004. The complaint, which was filed in the U.S. District Court for the Northern District of Texas, alleges that he sold 600,000 shares of the company Mamma.com, Inc. based on material, nonpublic information concerning an upcoming PIPE (private investment in public equity) offering of Mamma.com stock. The key issue in the case relates to whether Mr. Cuban had a duty to maintain trust and confidence to the source of such information that he breached.

The Facts

According to the SEC complaint, the key facts to the case are as follows. In March 2004, Mark Cuban purchased 600,000 shares of Mamma.com, which represented a 6.3 percent stake in the company....

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