DALLAS (AP) -- In an Oct. 3 story about billionaire Mark Cuban's insider-trading trial, The Associated Press misquoted Cuban when he explained why he would not agree to refrain from selling his stock in a Canadian Internet company. Cuban said he didn't know what the company's CEO "was going to tell me." He didn't use the phrase, "Nobody's going to tell me."
A corrected version of the story is below:
Cuban, gov't lawyer spar at insider-trading trial
Gov't tries to undermine billionaire basketball owner Mark Cuban in insider-trading case
By DAVID KOENIG
AP Business Writer
DALLAS (AP) -- Mark Cuban says he's a follow-the-rules investor who checked with his broker to make sure that his 2004 sale of stock in an Internet company was legal.
Cuban testified Thursday that he was upset when the company's CEO told him news that would reduce the value of his shares, for which he'd paid $7.5 million. But he said he did nothing improper when he sold those shares over the next two days.
The Securities and Exchange Commission is suing the owner of the Dallas Mavericks for insider trading, claiming that he broke a promise of confidentiality and traded on private information that gave him an advantage over other investors.
A jury in federal district court is hearing the civil lawsuit, which doesn't involve criminal charges.
The case may hinge on a single phone call between Cuban and the CEO of Mamma.com Inc., a search-engine company based in Canada. In recorded testimony played to jurors this week, CEO Guy Faure said he told Cuban about the planned stock issuance. Faure said that Cuban agreed at the outset that the information would be confidential.
Cuban testified that he was upset to learn about the stock offering, which would dilute the shares of earlier investors like himself, but he denied ever agreeing to keep the information confidential. He said he couldn't recall details of the conversation.
Executives of Mamma.com, a search-engine company based in Canada, believed that Cuban had promised not to trade until the stock offering was publicly announced. Cuban said he would never have made such an agreement.
"I just wouldn't," Cuban said, explaining that he didn't know what Faure "was going to tell me."
An email from his broker at UBS suggested that Cuban asked if his sale of Mamma.com stock was legal. "I don't like to do anything that's not 100 percent kosher," he wrote.
Cuban said he had reasons beyond the stock offering for selling his shares, including concern over ties between Mamma.com and a convicted stock swindler, Irving Kott. But SEC lead lawyer Jan Folena produced an email exchange from early 2004, before Cuban sold his stock, in which he appeared to dismiss another investor's worries about Kott.
Folena also produced an email in which Cuban directed a reporter for his sharesleuth.com website to dig up dirt on Faure and Mamma.com. Folena said that Cuban wanted to discredit Faure's recollection of the critical 2004 phone call.
Folena charged Cuban of cheating because he couldn't stand the idea of losing on an investment.
"You look at every loss in your life as a huge failure," she said.
"Absolutely not," Cuban answered.
Folena then quoted from a business article that Cuban wrote in which he said he took every loss as a huge failure.
Cuban was Mamma.com's biggest shareholder, owning a 6 percent stake. The SEC says Cuban avoided $750,000 in losses by selling on insider information before the shares fell by nearly 10 percent once the private stock offering was announced. The SEC wants Cuban to give up that money and pay a fine.
As Cuban took the witness stand Thursday, he was relaxed -- smiling and making a few jokes. He smiled less often as he jousted throughout the day with Folena.
In the afternoon, guided by one of his lawyers, Cuban told the jury his life story -- growing up in Pittsburgh; graduating from Indiana University; moving to Dallas and sharing an apartment with five other guys; starting his first company at 25; becoming a billionaire in 1999 when he and his business partner sold Broadcast.com to Yahoo for $5.7 billion.
Cuban looked directly at the jurors as he recounted buying the Mavericks. His wife no longer sits with him because he screams too much, and he misses some games to spend time with his three kids.
"I'm the luckiest guy in the world," he said of his wealth, which Forbes estimates at $2.5 billion. The jurors paid rapt attention; a few of them smiled.
The trial will resume Monday.
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