Witness says Mark Cuban understood insider trading restrictions

Oct. 3, 2013 at 1:35 PM
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DALLAS, Oct. 3 (UPI) -- A key prosecution witness at Texas billionaire Mark Cuban's insider trading trial said information given Cuban in June 2004 could not be used to his advantage.

In a videotaped deposition, Securities and Exchange Commission witness Guy Faure, the former chief executive officer of Mamma.com, said he contacted Cuban by email and in a subsequent phone call informed him that Mamma.com's board had decided to issue more shares of the company, which would have diluted the value of Cuban's holdings, The Texas Lawbook reported Thursday.

Prosecutors say Cuban, owner of the Dallas Mavericks basketball team, sold his 600,000 shares of Mamma.com soon after the phone call and avoided a loss of about $750,000.

Faure said Cuban acknowledged during the call that he understood he had been given insider information that he could not use to his financial advantage.

Faure said that Cuban, at the end of the phone call reacted by saying, "Well, now I'm screwed. I can't sell."

"Mr. Cuban was not impolitely yelling at me, but he was not happy," Faure said.

Faure's deposition was taped in 2011. He could not be forced to attend the trial in Dallas because he is a Canadian citizen and, therefore, cannot be subpoenaed, the Texas Lawbook said.

SEC attorneys also pointed out that Faure was not there to defend himself after Cuban's attorneys tried to undercut Faure's credibility.

Tom Melsheimer, one of Cuban's attorneys, presented evidence the SEC was investigating Mamma.com for possible stock manipulation, which, he said, provided Faure with the motivation to testify against Cuban.

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