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Money is not really an issue for Mark Cuban. As the outspoken, self-made billionaire owner of the Dallas Mavericks, Cuban has been fined a staggering $2 million by NBA Commissioner David Stern over the years. Whether he is fined for criticizing NBA refs via his Twitter-feed, criticizing NBA refs during a post-game news conference, or criticizing NBA refs during an on-court tantrum, Cuban handles the fines with a devil-may-care smile. For Cuban its about getting his way, no matter the cost.
Recently, Cuban used his deep pockets to gently-mock another authority figure: The Securities and Exchange Commission (SEC). The SEC is investigating Cuban for alleged insider trading involving the sale of Mamma.com. Cuban allegedly sold his shares in Mamma.com after promising not to trade his shares before the company’s private stock offering.
Cuban, through his attorney, has now offered to pay for the SEC investigation in order to speed-up the process. In a line that sounds as if it came straight from Cuban, attorney Stephen Best said, “I have never heard about the government becoming indignant about accepting” assistance.
Whether the offer was tongue-in-cheek or not, United States District Judge Reggie Walton is taking the offer seriously. Judge Walton ordered the SEC to investigate whether it can accept Cuban’s offer.
The offer is unprecedented according to SEC attorney Melinda Hardy. Unprecedented, and likely untenable. Cuban’s offer is to pay for outside contractors to help comb through the reportedly extensive file. As Judge Walton noted, the SEC must investigate whether the federal government hiring policies would allow Cuban to pay for those contractors, and whether the contractors would be allowed to review any confidential documents.
Other questions also remain. Who would select, oversee, and review the independent contractors? Is Cuban willing to simply write the government a blank check or would he seek to retain some control? Is it even ethical for a contractor, especially an independent contract attorney, to investigate an individual who is at the same time paying the bills? There are clear incentives to avoid finding any wrong-doing by Cuban when he is also the one signing the checks.
Cuban’s offer will most likely not be accepted by the SEC. Outside the questionable legality of Cuban’s offer, the SEC would be admitting it cannot handle a the complexity of a major insider trading investigation without the aid of the alleged offender. Not an intimidating enforcement stance for the SEC to take.
Cuban’s offer is just another dig at authority. The SEC should take note at how Commissioner Stern has enjoyed ten years of dealing with Cuban. “Ten years” Stern said. ”It feels like fifty.”
– M. Shamus Quinlan
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