Mark Cuban is not letting it go. More than 18 months after a federal jury found him not guilty of insider trading, the billionaire owner of the National Basketball Association’s Dallas Mavericks has intensified his one-man crusade against authorities’ attempts to crack down on market manipulation. Cuban, 56, has spent much of the time since his acquittal lambasting the Securities and Exchange Commission, which brought the action against him, accusing the agency’s enforcement division of being filled with careerists concerned more with personal gain than market efficiency or fairness; the SEC, he quipped in October 2013, stands for “swiftly enhanced careers.”
The U.S. prohibition against insider trading is primarily a creature of the common law, stitched together through precedents dating from the postwar years. There’s no statute defining the practice as a crime; actions are wedged into existing laws against fraud. The lack of clarity around the definition of insider trading has long been a subject of debate in legal circles; and in February, Cuban filed a brief before the Second U.S. Circuit Court of Appeals in New York, which is reviewing its own decision late last year to overturn the insider trading convictions of former hedge fund traders Anthony Chiasson and Todd Newman, to voice his support for legislation.
“Congressional codification of exactly what constitutes insider trading is required,” Cuban and his lawyers wrote in the brief.
Most of Cuban’s stunts and interventions on the insider trading issue over the past year — and there have been many, including a filmed call to the SEC to see whether he would be guilty of insider trading if he bought a particular stock — have revolved around this lack of clarity. But elsewhere he’s suggested that the prohibition against insider trading may do nothing to achieve its presumed policy objectives: to boost investor confidence in the markets and make capital formation easier. Cuban says prosecutors need to do more to demonstrate that actions can have a positive impact on market efficiency and fairness.
Whether he wants the debate to stop at congressional clarification of the law or open on to a broader discussion of the merits of making insider trading illegal in the first place — a minority position on Wall Street but one with vocal support — is less apparent.
