Dancing With the Stars alum and Dallas Mavericks owner Mark Cuban has just been charged with insider trading by the SEC (the Securities and Exchange Commission)!!!!
Upon learning it was raising money in a private offering, Cuban allegedly sold dumped his shares in Mamma.com, also known as Copernic.
The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.
In a PIPE transaction new shares are issued at a discount to the current trading price. An announcement of a PIPE transaction is often followed by a drop in the stock price as shareholders anticipate their stake will be diluted.
Maybe he can get some advice from Martha Stewart???
[Image via WENN.]