Mark Cuban and Sec
Even though the information about PIPEs was material inside information, Mark Cuban was not accused as traditional insider information. To qualify as traditional insider trading, there must involve true insiders buying or selling the company’s stock based on material inside information. …show more content…
SEC rule 10b-5-2 identified one who has a “duty of trust or confidence” connected to misappropriation insider trading. First on the list is “Whenever a person agrees to maintain information in confidence, that person has a legal duty to maintain confidence.” This can apply in Mark Cuban’s case if he agreed to confidentiality on the phone with the mamma.com CEO that day. Mark Cuban then became a person who had a legal duty to maintain confidence and not act upon the information he was told.
Cuban said, “I’m screwed, I can’t sell.” It didn’t mean that he would not sell his shares. However, because he had requested more information from another executive and sale representation, the CEO may plausibly have understood that Cuban would not sell before a public announcement of the PIPE offering. Basically, investors are on notice that if they receive nonpublic