Billionaire Mark Cuban could find himself back in court facing charges that he sold stock in an Internet start-up after receiving insider information from company executives, a federal appeals court ruled Tuesday.
The case revolves around a Securities and Exchange Commission case filed in 2008 that alleged that Cuban sold his entire 6% stake in Internet startup Mamma.com after learning about a private stock offering the company was planning from company executives. According to a report in the Wall Street Journal, the Fifth Circuit Court of Appeals ruled Sept. 21 that there was "more than a plausible" basis that Cuban agreed not to trade the stock after talking to company executives.
"...we are persuaded that the case should not have been dismissed ... and must proceed to discovery," the court said in its ruling.
According to the original suit, the SEC claimed that Cuban avoided about $750,000 in losses by selling the stock. Private stock offerings usually result in a short term drop in a stock's price.
According to the Journal, Cuban, who owns the National Basketball Association Dallas Mavericks and founded cable network HDNet, will appeal the decision and has called the SEC case "utterly meritless."
Cuban has claimed that while he agreed to keep the information about the stock offering close to the vest, it did not require that he hold onto his shares. A U.S. District Court agreed in 2009 and dismissed the case.
With the most recent appellate decision, the case will be sent back to the lower court for retrial or settlement discussions.
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