Mark Cuban sparred with a government lawyer Thursday over why the billionaire and Dallas Mavericks owner dumped his shares in a Canadian search-engine company in 2004.
Cuban says he had several reasons for selling his stock, including learning about ties between the company and a convicted stock swindler.
The Securities and Exchange Commission says that Cuban sold only after the CEO of Mamma.com Inc. told him confidentially of a pending stock offering that would lower the value of his shares.
In federal district court, an SEC lawyer used Cuban's own words to undermine his defense. In several emails and blogs from 2004, Cuban said he sold his shares in Mamma.com because he didn't like the private stock offering that the company was planning.
The CEO, Guy Faure, testified that Cuban agreed to keep a critical phone call confidential, and that's when he told Cuban about the stock offering. Faure said Cuban became angry because he'd be prohibited from selling his shares until the company announced the offering. Instead, Cuban sold his shares before the offering was disclosed to the public.
Asked about the call, Cuban acknowledged, "I was upset." He said he couldn't recall other details of the conversation, but his lawyers have denied that he ever promised to keep the CEO's information confidential or to refrain from trading on it. Cuban was the company's biggest shareholder, having paid $7.5 million for a 6 percent stake.
When court was called into session Thursday, Cuban was relaxed on the witness stand, smiling and making a few jokes about the Los Angeles Lakers and other topics. He smiled less often as he jousted throughout the morning with Jan Folena, an SEC lawyer.
Cuban's lawyers argued that one of the reasons he sold his stock was concern over ties between Mamma.com and a convicted stock swindler, Irving Kott. But 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 suggested that Cuban assigned a former reporter to dig up dirt on Faure, so that he could discredit Faure's recollection of the critical 2004 phone call.
A jury of 10 is hearing the civil lawsuit. The SEC wants Cuban to pay a fine and repay $750,000 in losses that he avoided by selling his shares before the stock offering was publicly announced. Cuban isn't charged with a crime, and he denies wrongdoing.