Uh oh. From the WSJ:
This isn't the first time that the NBA has been rocked with an insider trading scandal. Brian Scalabrine narrowly escaped conviction a few years back when it was alleged that he sold his shares of Krispy Kreme just before the stock tanked. It looked like a slam dunk because Scalabrine had the Krispy Kreme headquarters listed as his home address at the time. Scalabrine escaped only when his lawyers were able to prove that he had accidentally called his accountant and bought $1 million in stock when he thought he had called the local branch to buy $1 million in donut milkshakes. His furious sell off in exchange to raise capital for the actual milkshakes just happened to coincide with the stock's rapid decline. We don't think Cuban will be so lucky.Source URL: http://ledger-heath.blogspot.com/2008/11/mark-cuban-in-trouble-with-feds.html
Visit ledger heath for Daily Updated Hairstyles Collection
The Securities and Exchange Commission filed insider trading charges against Mark Cuban, the outspoken owner of the Dallas Mavericks, for allegedly dumping shares in Mamma.com upon learning it was raising money in a private offering (full text of complaint).
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.
This isn't the first time that the NBA has been rocked with an insider trading scandal. Brian Scalabrine narrowly escaped conviction a few years back when it was alleged that he sold his shares of Krispy Kreme just before the stock tanked. It looked like a slam dunk because Scalabrine had the Krispy Kreme headquarters listed as his home address at the time. Scalabrine escaped only when his lawyers were able to prove that he had accidentally called his accountant and bought $1 million in stock when he thought he had called the local branch to buy $1 million in donut milkshakes. His furious sell off in exchange to raise capital for the actual milkshakes just happened to coincide with the stock's rapid decline. We don't think Cuban will be so lucky.Source URL: http://ledger-heath.blogspot.com/2008/11/mark-cuban-in-trouble-with-feds.html
Visit ledger heath for Daily Updated Hairstyles Collection
No comments:
Post a Comment