Mark Cuban sues SEC for access to insider trading documents after filing FOI requests

By Schuyler Dixon, Gaea News Network
Friday, May 29, 2009

Mark Cuban sues SEC over insider trading documents

DALLAS — Mark Cuban sued the Securities and Exchange Commission on Thursday for access to documents detailing the insider trading case against the Dallas Mavericks owner. The Dallas billionaire filed requests for records in December under the Freedom of Information Act. That was a month after the SEC brought a civil action against Cuban, accusing him of selling shares of Internet search engine company after receiving confidential information about a private offering.

Cuban’s lawsuit, filed in U.S. District Court in Washington, claims the SEC improperly rejected some requests, didn’t respond quickly enough to appeals of rejections and failed to conduct adequate searches for some records.

Cuban provided a copy of his lawsuit to The Associated Press after it was reported by The Dallas Morning News. He didn’t comment further. An SEC spokesman declined comment.

The lawsuit said Cuban sought records of investigations involving Copernic Inc., the name for established two years ago, and an array of current and former Cuban enterprises, including the Mavericks, HDNet and Inc.

According to the lawsuit, the SEC missed deadlines to respond to appeals of several rejected requests, leaving Cuban no choice but to sue.

“Because the SEC has failed to timely respond to Mr. Cuban’s FOIA/Privacy Act appeals, Mr. Cuban has exhausted his administrative remedies,” the lawsuit said.

The SEC was vague in rejecting many of the requests, the lawsuit said, and sometimes claimed investigations were ongoing when the agency was on record as having completed the probes. The lawsuit also cited President Barack Obama’s executive order from January declaring that federal agencies “should adopt a presumption in favor of disclosure.”

The lawsuit was filed two days after Cuban appeared in federal court for a hearing on his motion to have the case dismissed. The hearing allowed attorneys to articulate arguments previously stated in motions and briefs since the suit’s filing in November. U.S. District Judge Sidney A. Fitzwater didn’t immediately rule on the motion.

The SEC alleges that Cuban avoided a $750,000 loss by selling his 600,000 shares, which represented a 6.3-percent stake in, after executives told him of plans for a private offering. Cuban’s legal team doesn’t acknowledge those facts as true. But even if they are, Cuban’s lawyers contend, he didn’t engage in insider trading because he wasn’t legally an “insider.”

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