Mark Cuban SEC insider trading allegation What was the SEC insider trading allegations about? (SEC) filed a civil suit against Cuban relating to alleged insider trading in the shares of Mamma.com, now known as Copernic. What was Cuban's defense? Cuban contended the facts were false and that the investigation was "a product of gross abuse of prosecutorial discretion". When were these allegations brought up? On November 17, 2008, Did Cuban successfully defend himself against these allegations? A federal jury in Texas found in favor of Cuban on October 16, 2013. What did Cuban do after he was cleared of the allegations? In March 2014, Cuban was on air at CNBC criticizing high-frequency trading (HFT). Is there anything else interesting about these allegations against Cuban? Cuban believed the investigation was motivated by an SEC employee having taken offense to his interest in possibly distributing the film Loose Change.
How much did they allege that Cuban profited from insider trading?
How much did the prosecution allege that Cuban profited from insider trading?
On November 17, 2008, it was reported that the U.S. Securities and Exchange Commission (SEC) filed a civil suit against Cuban relating to alleged insider trading in the shares of Mamma.com, now known as Copernic. A stock dilution occurred shortly after a trade in June 2004, giving hints of inside knowledge at the time of the trade, and Cuban allegedly was saved from a loss of $750,000. The SEC claimed that Cuban ordered the sale of his holdings in Mamma.com after he had been confidentially approached by the company to participate in a transaction likely to dilute shares of current shareholders. Cuban disputed the charges, saying he had not agreed to keep the information secret. On his blog, Cuban contended the facts were false and that the investigation was "a product of gross abuse of prosecutorial discretion". DealBook, a section of The New York Times, reported through an anonymous source that Cuban believed the investigation was motivated by an SEC employee having taken offense to his interest in possibly distributing the film Loose Change.  In July 2009, the U.S. District Court dismissed the charges against Cuban, and the SEC appealed. In September 2010, an appeals court said that the district court had erred and that further proceedings would be necessary to address the merits of the suit.  A federal jury in Texas found in favor of Cuban on October 16, 2013. The nine-member jury issued the verdict after deliberating 3 hours and 35 minutes.  In March 2014, Cuban was on air at CNBC criticizing high-frequency trading (HFT). Those against HFT, such as Cuban, believe the technology is equivalent to automated insider trading. CANNOTANSWER
Cuban allegedly was saved from a loss of $750,000.
Mark Cuban (born July 31, 1958) is an American billionaire entrepreneur, television personality, and media proprietor whose net worth is an estimated $4.3 billion, according to Forbes, and ranked #177 on the 2020 Forbes 400 list. He is the owner of the Dallas Mavericks professional basketball team of the National Basketball Association (NBA) and the co-owner of 2929 Entertainment. He is also one of the main "shark" investors on the ABC reality television series Shark Tank.

Early life and education
Cuban was born in Pittsburgh, Pennsylvania. His father, Norton Cuban, was an automobile upholsterer. Cuban described his mother, Shirley, as someone with "a different job or different career goal every other week."

Cuban grew up in Mount Lebanon, a suburb of Pittsburgh, in a Jewish working-class family. His paternal grandfather changed the family name from Chabenisky to Cuban after his family emigrated from Russia through Ellis Island. His maternal grandparents, who were also Jewish, came from Romania.

Cuban first ventured into business at age 12. He sold garbage bags to pay for a pair of expensive basketball shoes. Some years later, he earned money by selling stamps and coins. At age 16, Cuban took advantage of a Pittsburgh Post-Gazette strike by running newspapers from Cleveland to Pittsburgh.

Instead of attending high school for his senior year, he enrolled as a full-time student at the University of Pittsburgh, where he joined the Pi Lambda Phi fraternity. He is a fan of Pittsburgh's "beloved" NFL team, the Pittsburgh Steelers. After one year at the University of Pittsburgh, Cuban transferred to Indiana University in Bloomington, Indiana, where he graduated from the Kelley School of Business in 1981 with a Bachelor of Science degree in management. He chose Indiana's Kelley School of Business without even visiting the campus because it "had the least expensive tuition of all the business schools on the top 10 list". During college, he had various business ventures, including a bar, disco lessons, and a chain letter.

After graduating, Cuban returned to Pittsburgh and took a job with Mellon Bank. He immersed himself in the study of machines and networking.

Career
On July 7, 1982, Cuban moved to Dallas, Texas, where he first found work as a bartender for a Greenville Avenue bar called Elan and then as a salesperson for Your Business Software, one of the earliest PC software retailers in Dallas. He was fired less than a year later, after meeting with a client to procure new business instead of opening the store.

Cuban started his own company, MicroSolutions, with help from his previous customers from Your Business Software. MicroSolutions was initially a system integrator and software reseller. The company was an early proponent of technologies such as Carbon Copy, Lotus Notes, and CompuServe. One of the company's largest clients was Perot Systems.

The company grew to more than $30 million in revenue, and in 1990, Cuban sold MicroSolutions to CompuServe—then a subsidiary of H&R Block—for $6 million. He made approximately $2 million after taxes on the deal.

Audionet and Broadcast.com
In 1995, Cuban and fellow Indiana University alumnus Todd Wagner joined Audionet (founded in 1989 by Chris Jaeb who retained 10% of the company), combining their mutual interest in Indiana Hoosier college basketball and webcasting. With a single server and an ISDN line, Audionet became Broadcast.com in 1998. By 1999, Broadcast.com had grown to 330 employees and $13.5 million in revenue for the second quarter. In 1999, Broadcast.com helped launch the first live-streamed Victoria's Secret Fashion Show. That year, during the dot com boom, Broadcast.com was acquired by Yahoo! for $5.7 billion in Yahoo! stock.

After the sale of Broadcast.com, Cuban hedged against the risk of a decline in the value of the Yahoo! shares he received in the deal. The Guinness Book of Records credits Cuban with the "largest single e-commerce transaction", after he purchased a Gulfstream V jet for $40 million over the internet in October 1999.

Yahoo!'s costly purchase of Broadcast.com is now regarded as one of the worst internet acquisitions of all time. Broadcast.com along with Yahoo!'s other broadcasting services were discontinued within a few years after the acquisition. Cuban has repeatedly described himself as very lucky to have sold the company before the dot-com bubble burst. However, he also emphasized that he hedged against the Yahoo! shares he received from the sale, and that he would have lost most of his fortune if he had not done so.

Cuban continues to work with Wagner in another venture, 2929 Entertainment, which provides vertically integrated production and distribution of films and video.

On September 24, 2003, the firm purchased Landmark Theatres, a chain of 58 arthouse movie theaters. The company is also responsible for the updated version of the TV show Star Search, which was broadcast on CBS. 2929 Entertainment released Bubble, a movie directed by Steven Soderbergh, in 2006.

Cuban was featured on the cover of the November 2003 premiere issue of Best magazine announcing the arrival of high-definition television. Cuban also was co-founder (with Philip Garvin) of AXS TV (formerly HDNet), the first high-definition satellite television network.

In February 2004, Cuban announced that he would be working with ABC television to produce a reality television series, The Benefactor. The premise of the six-episode series involved 16 contestants trying to win $1 million by participating in various contests, with their performances being judged by Cuban. It premiered on September 13, 2004, but due to poor ratings, the series was canceled before the full season aired.

In 2018, Cuban was No.190 on Forbes list of "World's Richest People", with a net worth of $3.9 billion.

Cuban financially supported Grokster in the Supreme Court case MGM v. Grokster. He is also a partner in Synergy Sports Technology, a web based basketball scouting and video delivery tool, used by many NBA teams.

Investments in startups
Cuban has also assisted ventures in the social software and distributed networking industries. He was an owner of IceRocket, a search engine that scours the blogosphere for content. Cuban was a partner in RedSwoosh—a company which uses peer-to-peer technology to deliver rich media, including video and software, to a user's PC—later acquired by Akamai. He was also an investor in Weblogs, Inc., which was acquired by AOL.

In 2005, Cuban invested in Brondell Inc., a San Francisco startup making a high-tech toilet seat called a Swash that works like a bidet but mounts on a standard toilet. "People tend to approach technology the same way, whether it's in front of them, or behind them", Cuban joked. He also invested in Goowy Media Inc., a San Diego Internet software startup. In April 2006, Sirius Satellite Radio announced that Cuban would host his own weekly radio talk show, Mark Cuban's Radio Maverick. However, the show has not materialized.

In July 2006, Cuban financed Sharesleuth.com, a website created by former St. Louis Post-Dispatch investigative reporter Christopher Carey to uncover fraud and misinformation in publicly traded companies. Experimenting with a new business model for making online journalism financially viable, Cuban disclosed that he would take positions in the shares of companies mentioned in Sharesleuth.com in advance of publication. Business and legal analysts questioned the appropriateness of shorting a stock prior to making public pronouncements which are likely to result in losses in that stock's value. Cuban insisted that the practice is legal in view of full disclosure.

In April 2007, Cuban partnered with Mascot Books to publish his first children's book, Let's Go, Mavs!. In November 2011, he wrote a 30,000-word e-book, How to Win at the Sport of Business: If I Can Do It, You Can Do It, which he described as "a way to get motivated".

In October 2008, Cuban started Bailoutsleuth.com as a grassroots, online portal for oversight over the U.S. government's $700 billion "bailout" of financial institutions.

In September 2010, Cuban provided an undisclosed amount of venture capital to store-front analytics company Motionloft. According to the company's CEO Jon Mills, he cold-emailed Cuban on a whim with the business proposition and claimed Cuban quickly responded that he would like to hear more. Mills credited that sentence for launching the company. In November 2013, several investors questioned Cuban about Mills' representation of a pending acquisition of Motionloft. Cuban denied an acquisition was in place. Mills was terminated as CEO of Motionloft by stockholders on December 1, 2013, and in February 2014 was arrested by the FBI and charged with wire fraud, it being alleged that Mills misrepresented to investors that Motionloft was going to be acquired by Cisco. Cuban has gone on record to state that the technology, which at least in part is meant to serve the commercial real estate industry, is "game changing" for tenants.

In 2019, Cuban, Ashton Kutcher, Steve Watts and Watts' wife Angela, invested a 50% stake in Veldskoen shoes fledgling U.S. business. In 2021, Cuban, Pantera Capital, BlockTower, Hashed, Cadenza Ventures (backed by 100x Group), CMS and QCP Capital backed a layer-2 decentralized exchange protocol, Injective Protocol and their CEO Eric Chen. Also in late 2021, Cuban purchased the entire town of Mustang, Texas, a 77-acre town in Navarro County. He told the Dallas Morning News that a buddy needed to sell it and, "I don't know what if anything I will do with it."

Shark Tank
Cuban has been a "shark" investor on the ABC reality program Shark Tank since season two in 2011.

As of May 2015, he has invested in 85 deals across 111 Shark Tank episodes, for a total of $19.9 million invested. The actual numbers vary because the investment happens after the handshake deal on live television, after the due diligence is performed to ensure the accuracy of the information presented in the pitch room. For instance, Hy-Conn, a manufacturer of removable fire hoses, after agreeing to a deal of $1.25 million for 100% of the company with Cuban, did not go through with the deal.

Cuban's top three deals, all with at least $1 million invested, are Ten Thirty One Productions, Rugged Maniac Obstacle Race, and BeatBox Beverages.

Since Cuban joined the show in 2011, the ratings for Shark Tank have increased, and also during his tenure, the show has won three Primetime Emmy Awards for Outstanding Structured Reality Program (from 2014 – 2016). As of 2022, Cuban is the richest of all Sharks to appear on the show after Sir Richard Branson.

Magnolia Pictures
Cuban owns film distributor Magnolia Pictures. Through Magnolia, he financed Redacted, a fictional dramatization based on the 2006 Mahmudiyah killings, written and directed by Brian De Palma. In September 2007, Cuban, in his capacity as owner of Magnolia Pictures, removed disturbing photographs from the concluding moments of the Redacted, citing copyrights/permissions issues.

Also in 2007, Cuban was reportedly interested in distributing through Magnolia an edition of the film Loose Change, which posits a 9/11 conspiracy theory, with Charlie Sheen narrating. Cuban told the New York Post, "We are having discussions about distributing the existing video with Charlie's involvement as a narrator, not in making a new feature. We are also looking for productions with an opposing viewpoint. We like controversial subjects, but we are agnostic to which side the controversy comes from."

In April 2011, Cuban put Magnolia Pictures and Landmark Theatres up for sale, but said, "If we don't get the price and premium we want, we are happy to continue to make money from the properties."

SEC insider trading allegation
On November 17, 2008, it was reported that the U.S. Securities and Exchange Commission (SEC) filed a civil suit against Cuban relating to alleged insider trading in the shares of Mamma.com, now known as Copernic. A stock dilution occurred shortly after a trade in June 2004, giving hints of inside knowledge at the time of the trade, and Cuban allegedly was saved from a loss of $750,000. The SEC claimed that Cuban ordered the sale of his holdings in Mamma.com after he had been confidentially approached by the company to participate in a transaction likely to dilute shares of current shareholders. Cuban disputed the charges, saying he had not agreed to keep the information secret. On his blog, Cuban contended the allegations were false and that the investigation was "a product of gross abuse of prosecutorial discretion". DealBook, a section of The New York Times, reported through an anonymous source that Cuban believed the investigation was motivated by an SEC employee having taken offense to his interest in possibly distributing the film Loose Change.

In July 2009, the U.S. District Court dismissed the charges against Cuban, and the SEC appealed. In September 2010, an appeals court said that the district court had erred and that further proceedings would be necessary to address the merits of the suit.

A federal jury in Texas found in favor of Cuban on October 16, 2013. The nine-member jury issued the verdict after deliberating 3 hours and 35 minutes.

In March 2014, Cuban was on air at CNBC criticizing high-frequency trading (HFT). Those against HFT, such as Cuban, believe the technology is equivalent to automated insider trading.

Sports businesses

Dallas Mavericks

On January 4, 2000, Cuban purchased a majority stake in the NBA's Dallas Mavericks for $285 million from H. Ross Perot Jr.

In the 20 years before Cuban bought the team, the Mavericks won only 40% of their games and had a playoff record of 21–32. In the 10 years following, the team won 69 percent of their regular season games and reached the playoffs in each of those seasons except for one. The Mavericks' playoff record with Cuban is 49–57, including their first trip to the NBA Finals in 2006, where they lost to the Miami Heat.

Historically, NBA team owners publicly play more passive roles and watch basketball games from skyboxes; Cuban sits alongside fans while donning team jerseys. Cuban travels in his private airplane—a Gulfstream V—to attend road games.

In May 2010, H. Ross Perot Jr., who retained 5% ownership, filed a lawsuit against Cuban, alleging the franchise was insolvent or in imminent danger of insolvency. In June 2010, Cuban responded in a court filing maintaining Perot is wrongly seeking money to offset some $100 million in losses on the Victory Park real estate development. The lawsuit was dismissed in 2011, due in part to Cuban asserting proper management of the team due to its recent victory in the 2011 NBA Finals. In 2014, the 5th Circuit Court affirmed that decision on appeal. Following his initial defeat, Perot attempted to shut out Mavericks fans from use of the parking lots he controlled near the American Airlines Center.

In January 2018, Cuban announced the Mavericks would be accepting Bitcoin as payment for tickets in the following season.

NBA fines
Cuban's ownership has been the source of extensive media attention and controversy involving league policies.

Cuban has been fined by the NBA, mostly for critical statements about the league and referees, at least $1.665 million for 13 incidents. In a June 30, 2006 interview, Mavericks player Dirk Nowitzki said about Cuban:

In an interview with the Associated Press, Cuban said that he matches NBA fines with charitable donations of equal amounts. In a nationally publicized incident in 2002, he criticized the league's manager of officials, Ed T. Rush, saying that he "wouldn't be able to manage a Dairy Queen." Dairy Queen management took offense to Cuban's comments and invited him to manage a Dairy Queen restaurant for a day. Cuban accepted the company's invitation and worked for a day at a Dairy Queen in Coppell, Texas, where fans lined up in the street to get a Blizzard from the owner of the Mavericks.

During the 2005–06 NBA season, Cuban started a booing campaign when former Mavericks player Michael Finley returned to play against the Mavericks as a member of the San Antonio Spurs. In a playoff series between the Mavericks and Spurs, Cuban cursed Spurs forward Bruce Bowen and was fined $25,000 by the NBA for rushing onto the court and criticizing NBA officials. After the 2006 NBA Finals, Cuban was fined $250,000 by the NBA for repeated misconduct following the Mavericks' loss to the Miami Heat in Game Five of the 2006 NBA Finals.

In February 2007, Cuban publicly criticized NBA Finals MVP Dwyane Wade and declared that he would get fined if he made any comments about what he thought really happened in the 2006 NBA Finals.

On January 16, 2009, the league fined Cuban $25,000 for yelling at Denver Nuggets player J. R. Smith at the end of the first half on a Mavericks-at-Nuggets game played on January 13. Cuban was apparently incensed that Smith had thrown an elbow that barely missed Mavericks forward Antoine Wright. Cuban offered to match the fine with a donation to a charity of Smith's choosing. Cuban stated that if he doesn't hear from Smith, then he will donate the money to the NHL Players' Association Goals and Dreams Fund in the names of Todd Bertuzzi and Steve Moore. In May 2009, Cuban made a reference to the Denver Nuggets being "thugs" after a loss to the Nuggets in game 3 of the Western Conference Semifinals. The statement was geared towards the Nuggets and their fans. As he passed Kenyon Martin's mother, who was seated near Cuban as he left the arena, he pointed at her and said, "that includes your son." This controversial comment revisited media attention on Cuban yet again. Cuban issued an apology the next day referencing the poor treatment of away fans in arenas around the league. The league issued a statement stating that they would not fine him.

On May 22, 2010, Cuban was fined $100,000 for comments he made during a television interview about trying to sign LeBron James.

Despite his history, he was notably silent during the Mavericks' 2011 championship playoff run.

Despite Cuban's history with David Stern, he believed the NBA Commissioner would leave a lasting legacy "of a focus on growth and recognizing that the NBA is in the entertainment business and that it's a global product, not just a local product. Whatever platforms that took us to, he was ready to go. He wasn't protective at all. He was wide open. I think that was great."

On January 18, 2014, Cuban was once again fined $100,000 for confronting referees and using inappropriate language toward them. As with previous fines, Cuban confirmed that he would match the fine with a donation to charity, however, with the condition that he reaches two million followers on his Twitter account. Cuban also jokingly commented that he could not let Stern leave without a proper farewell.

On February 21, 2018, Cuban was fined $600,000 by the NBA for stating that the Dallas Mavericks should "tank for the rest of the season." Commissioner Adam Silver stated that the fine was "for public statements detrimental to the NBA."

On March 6, 2020, Cuban was fined $500,000 by the NBA for "public criticism and detrimental conduct regarding NBA officiating", according to the league.

Major League Baseball
Cuban has repeatedly expressed interest in owning a Major League Baseball franchise and has unsuccessfully attempted to purchase at least three franchises. In 2008, he submitted an initial bid of $1.3 billion to buy the Chicago Cubs and was invited to participate in a second round of bidding along with several other potential ownership groups. Cuban was not selected to participate in the final bidding process in January 2009. In August 2010, Cuban actively bid to buy the Texas Rangers with Jeffrey L. Beck. Cuban stopped bids after 1 a.m., having placed bids totaling almost $600 million. He had outbid a competing ownership group led by ex-pitcher and Rangers executive Nolan Ryan, but lost the deal before the Rangers played the San Francisco Giants in the 2010 World Series.

In January 2012, Cuban placed an initial bid for the Los Angeles Dodgers, but was eliminated before the second round of bidding. Cuban felt that the value of the Dodgers' TV rights deal drove the price of the franchise too high. He had previously said that he would not be interested in buying the franchise at $1 billion, telling the Los Angeles Times in November 2011 "I don't think the Dodgers franchise is worth twice what the Rangers are worth." However, as the bidding process drew near many speculated that the sale would surpass $1.5 billion, with Jon Heyman of CBS Sports reporting on Twitter that at least one bid in the $1–1.5 billion range was placed in the initial round of the bidding process. Ultimately, the Dodgers sold for $2.15 billion to Guggenheim Baseball Management.

Cuban also previously expressed interest in becoming a minority owner of the New York Mets after owner Fred Wilpon announced in 2011 that he was planning to sell up to a 25% stake in the team.

Cuban has wanted to purchase his hometown Pittsburgh Pirates, but was rebuffed by then owner Kevin McClatchy in 2005.

Other sports businesses
In 2005, Cuban expressed interest in buying the NHL's Pittsburgh Penguins. In 2006, Cuban joined an investment group along with Dan Marino, Kevin Millevoi, Andy Murstein, and Walnut Capital principals Gregg Perelman and Todd Reidbord to attempt to acquire the Penguins. The franchise ultimately rejected the group's bid when team owners Mario Lemieux and Ronald Burkle took the team off the market.

At WWE's Survivor Series in 2003, Cuban was involved in a staged altercation with Raw General Manager Eric Bischoff and Raw wrestler Randy Orton. On December 7, 2009, Cuban acted as the guest host of Raw, getting revenge on Orton when he was the guest referee in Orton's match against Kofi Kingston, giving Kingston a fast count victory. He then announced that Orton would face Kingston at TLC: Tables, Ladders & Chairs. At the end of the show, Cuban was slammed through a table by the number one contender for the WWE Championship, Sheamus.

On September 12, 2007, Cuban said that he was in talks with WWE Chairman Vince McMahon to create a mixed martial arts company that would compete with UFC. He is now a bondholder of Zuffa, which was formerly UFC's parent company.

Cuban followed up his intentions by organizing "HDNet Fights", a mixed martial arts promotion which airs exclusively on HDNet and premiered on October 13, 2007, with a card headlined by a fight between Erik Paulson and Jeff Ford as well as fights featuring veterans Drew Fickett and Justin Eilers.

Since 2009, Cuban has been a panelist at the annual MIT Sloan Sports Analytics Conference.

In April 2010, Cuban loaned the newly formed United Football League (UFL) $5 million. He did not own a franchise, and he was not involved in day-to-day operations of the league nor of any of its teams. In January 2011, he filed a federal lawsuit against the UFL for their failure to repay the loan by the October 6, 2010 deadline.

In June 2015, Cuban invested in the esports betting platform Unikrn.

In February 2016, Cuban purchased a principal ownership stake in the Professional Futsal League.

Political activity

Cuban is an admirer of author and philosopher Ayn Rand. About Rand's novel The Fountainhead, he said, that it "was incredibly motivating to me. It encouraged me to think as an individual, take risks to reach my goals, and responsibility for my successes and failures. I loved it." His political views have leaned toward libertarianism. He held a position on the centrist Unity08 political organization's advisory council. While leaning towards libertarianism, Cuban posted an entry on his blog claiming paying more taxes to be the most patriotic thing someone can do.

In 2012, Cuban donated $7,000 to political campaigns, with $6,000 going to Republican Senator Orrin Hatch of Utah and $1,000 to Democratic California Congresswoman Zoe Lofgren.

On February 8, 2008, Cuban voiced his support for the draft Bloomberg movement attempting to convince New York City Mayor Michael Bloomberg to run in the U.S. presidential election of 2008 on his blog. Cuban concluded a post lamenting the current state of U.S. politics: "Are you listening, Mayor Bloomberg? For less than the cost of opening a tent pole movie, you can change the status quo." He eventually voted for Barack Obama in the 2008 election.

In November 2012, in response to Donald Trump offering President Obama $5 million to a charity of President Obama's choosing if he released passport applications and college transcripts to the public, Cuban offered Trump $1 million to a charity of Trump's choosing if Trump shaved his head.

On December 19, 2012, Cuban donated $250,000 to the Electronic Frontier Foundation to support its work on patent reform. Part of his donation funded a new title for EFF's staff attorney Julie Samuels: The Mark Cuban Chair to Eliminate Stupid Patents.

At the Code/Media conference in February 2015, Cuban said of net neutrality that "having [the FCC] overseeing the Internet scares the shit out of me".

Cuban formally endorsed Hillary Clinton for president at a July 30, 2016, rally in Pittsburgh, Pennsylvania. During that campaign stop, Cuban said of Republican nominee Donald Trump, "You know what we call a person like that in Pittsburgh? A jagoff ... Is there any bigger jagoff in the world than Donald Trump?"

On November 22, 2016, Cuban met with the then President-elect Trump's key advisor Steve Bannon, according to reports.

During an appearance on an episode of Hannity in May 2020, Cuban voiced his support for former Vice President Joe Biden in the 2020 U.S. presidential election.

On February 2, 2021, Cuban joined Reddit's WallStreetBets "Ask Me Anything" forum with millions of community members and fielded user questions related to the widely publicized battle between retail traders and Wall Street short sellers over GameStop shares. In the previous days, GameStop shares experienced a meteoric rise to as much as $489 on January 28, 2021, up from $17.15 on January 4, 2021. The growth was mainly brought on by an organized group of Reddit users named "WallStreetBets" that noticed GameStop stock was heavily shorted by Wall Street hedge firms and launched an ensuing campaign to buy enough shares to raise share value and produce a GameStop short squeeze. In the aftermath, the stock became heavily volatile as hedge firms repositioned themselves in the market. Firms like Melvin Capital required bailouts exceeding $2B and retail traders experienced excessive but temporary gains, whereas GameStop share value dropped to below $100 within a few days of closing at over $300. The consistent decline into February raised a lot of questions about next steps for retail traders and prompted Cuban to step in and provide advice to the Reddit community. Amid the volatility, Cuban had been an outspoken supporter of the WallStreetBets community alongside other wealthy financial figureheads like Chamath Palihapitiya, Cameron Winklevoss and Tyler Winklevoss. In the AMA session, Cuban publicly called the trust of the U.S. Securities & Exchange Commission into question as well as the capabilities of zero commission brokerage firms, like Robinhood, that restricted retail traders from purchasing GameStop shares and other shorted stocks which he said crippled demand. Cuban's advice to Reddit users was to hold GameStop shares if they could afford it in anticipation of additional short sales by Wall Street firms, but ultimately acknowledged that the odds were stacked against them and to use it as a learning lesson. He offered insight into his trading technique suggesting that traders know why they are buying something and to "HODL"(hold on for dear life) until they learn that something has changed. Cuban noted a need for policy change to better support retail traders, credited the WallStreetBets community for leading the charge, and expressed optimism about blockchain trading as a more efficient, transparent and trustworthy form of trading for retail traders in the future.

Fallen Patriot Fund
Cuban started the Fallen Patriot Fund to help families of U.S. military personnel killed or injured during the Iraq War, personally matching the first $1 million in contributions with funds from the Mark Cuban Foundation, which is run by his brother Brian Cuban.

Speculation of a presidential run
In September 2015, Cuban stated in an interview that running for president was "a fun idea to toss around", and that, if he were running in the 2016 U.S. presidential election, he "could beat both Trump and Clinton". This was interpreted by many media outlets as indication that Cuban was considering running, but he clarified soon afterward that he had no intention to do so.

In October 2015, Cuban posted on Twitter, "Maybe I'll run for Speaker of the House." At the time, there was no clear front-runner to replace the outgoing John Boehner; the Speaker of the House does not have to be a member of Congress.

Cuban told Meet the Press in May 2016 that he would be open to being Clinton's running mate in the election, though he would seek to alter some of her positions in order to do so. In the same interview, the self-described "fiercely independent" Cuban also said that he would consider running as Republican nominee Trump's running mate after having a meeting with Trump about understanding the issues, Trump's positions on them, and coming up with solutions. Cuban also described Trump as "that friend that you just shake your head at. He's that guy who'd get drunk and fall over all the time, or just says dumb shit all the time, but he's your friend." On July 21, 2016, Cuban appeared on a live segment on The Late Show with Stephen Colbert entitled "Gloves Off: Mark Cuban Edition" in which he mocked Trump, including referencing the Trump companies' multiple bankruptcies and the failed Trump University program, and questioning the size of Trump's actual net worth.

In a September 2016 interview with NPR's Scott Simon, Cuban effectively positioned himself to support Clinton. He posited that the best strategy to beat Trump was to attack his insecurities, especially that of his intellect. He also added that Trump is the least qualified to be president and is not informed about policies.

Later in September 2016, during a post-presidential debate interview, Cuban criticized Trump's characterization that paying the minimum required taxes 'is smart' and criticized Trump for not paying back into the system that allowed him to amass such wealth.

In October 2017, Cuban said that he would "definitely" run for president if he were single. Later that month, Cuban claimed that if he ran for president in 2020, it would be as a Republican, and described himself as "socially a centrist ... but very fiscally conservative". It had also been speculated that he could have challenged president Donald Trump in 2020 as a Democrat. However, in a March 2019 interview with the New York Daily News, Cuban stated that he was "strongly considering running" for president as an independent candidate. In May 2019, Cuban said: "It would take the perfect storm for me to do it. There's some things that could open the door, but I'm not projecting or predicting it right now."

In a June 2020 interview with CNN and former Obama advisor David Axelrod, Cuban revealed that he had seriously considered running for president that year as an independent candidate. He went so far as to commission a national poll, which, according to Cuban, showed he would only receive 25 percent of the vote in a hypothetical matchup with President Donald Trump and former Vice President Joe Biden. Cuban also said that the poll showed his candidacy would have pulled votes from both Trump and Biden.

In early 2021, he decided to stop playing the National Anthem at Dallas Mavericks games in order to "respect those whose believed the anthem did not represent them." He also supported the movement as far back as late 2020. The NBA responded by requiring every team to play it, citing it as their "long-standing policy". Cuban did not complain, and ended up playing the anthem.

Personal life
Cuban has two brothers, Brian and Jeff.

In September 2002, Cuban married Tiffany Stewart in a private ceremony in Barbados. They have two daughters, born in 2003 and 2006, and a son born in 2010. They live in a  mansion in the Preston Hollow area of Dallas, Texas.

In April 2019, after missing a taping of The View, Cuban revealed he had a procedure done to treat his atrial fibrillation. His diagnosis was first revealed in 2017 on Twitter.

Cuban is a vegetarian.

Philanthropy
In 2003, Cuban founded the Fallen Patriot Fund to help families of U.S. military personnel killed or injured during the Iraq War.

In June 2015, Cuban made a $5 million donation to Indiana University at Bloomington for the "Mark Cuban Center for Sports Media and Technology", which was built inside Assembly Hall, the school's basketball arena.

In March 2020, during the COVID-19 pandemic, Cuban posted an offer on LinkedIn to small business owners who had questions about what to do in order to survive the economic downturn being caused by the pandemic. He said people could ask him anything, but that his preference was "going to be helping small biz trying to avoid layoffs and hourly reductions." There were more than 10,000 comments in response to his offer.

In 2020, Cuban picked up homeless former NBA player Delonte West from a gas station in Dallas. He paid for a hotel room for West along with his treatment at a drug rehabilitation center.

Sexual assault complaint 
In a March 6, 2018 article, Willamette Week reported on an alleged April 2011 incident between Cuban and a female patron of a Portland, Oregon bar called the Barrel Room. The woman told Portland police that Cuban sexually groped her while she posed for pictures with him. She submitted seven photographs, two of which Portland Police Detective Brendan McGuire referred to as "significant". Cuban denied the allegations, and his attorney provided the results of a polygraph test taken by Cuban and written statements from two medical doctors stating that the actions described were anatomically improbable. The Portland District Attorney's office declined to prosecute, citing a lack of concrete evidence to support the claim and the woman's preference not to proceed with charges, and concluding that "no crime can be proven beyond a reasonable doubt". The NBA announced on March 8, 2018, that it was reviewing the matter.

Awards and honors

Business

1998 Kelley School of Business Alumni Award – Distinguished Entrepreneur: 1998
2011 D Magazine CEO of the Year

Sports

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Bibliography
How to Win at the Sport of Business: If I Can Do It, You Can Do It. Diversion Publishing. 2011. 
Let's Go, Mavs!. Mascot Books. 2007.

References

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Mark Cuban collected news and commentary at The Guardian

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Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information is illegal. This is because it is seen as unfair to other investors who do not have access to the information, as the investor with insider information could potentially make larger profits than a typical investor could make. The rules governing insider trading are complex and vary significantly from country to country. The extent of enforcement also varies from one country to another. The definition of insider in one jurisdiction can be broad, and may cover not only insiders themselves but also any persons related to them, such as brokers, associates, and even family members. A person who becomes aware of non-public information and trades on that basis may be guilty of a crime.

Trading by specific insiders, such as employees, is commonly permitted as long as it does not rely on material information not in the public domain. Many jurisdictions require that such trading be reported so that the transactions can be monitored. In the United States and several other jurisdictions, trading conducted by corporate officers, key employees, directors, or significant shareholders must be reported to the regulator or publicly disclosed, usually within a few business days of the trade. In these cases, insiders in the United States are required to file a Form 4 with the U.S. Securities and Exchange Commission (SEC) when buying or selling shares of their own companies. The authors of one study claim that illegal insider trading raises the cost of capital for securities issuers, thus decreasing overall economic growth. However, some economists, such as Henry Manne, have argued that insider trading should be allowed and could, in fact, benefit markets.

There has long been "considerable academic debate" among business and legal scholars over whether or not insider trading should be illegal. Several arguments against outlawing insider trading have been identified: for example, although insider trading is illegal, most insider trading is never detected by law enforcement, and thus the illegality of insider trading might give the public the potentially misleading impression that "stock market trading is an unrigged game that anyone can play." Some legal analysis has questioned whether insider trading actually harms anyone in the legal sense, since some have questioned whether insider trading causes anyone to suffer an actual "loss", and whether anyone who suffers a loss is owed an actual legal duty by the insiders in question.

Illegal
Rules prohibiting or criminalizing insider trading on material non-public information exist in most jurisdictions around the world (Bhattacharya and Daouk, 2002), but the details and the efforts to enforce them vary considerably. In the United States, Sections 16(b) and 10(b) of the Securities Exchange Act of 1934 directly and indirectly address insider trading. The U.S. Congress enacted this law after the stock market crash of 1929. While the United States is generally viewed as making the most serious efforts to enforce its insider trading laws, the broader scope of the European model legislation provides a stricter framework against illegal insider trading. In the European Union and the United Kingdom all trading on non-public information is, under the rubric of market abuse, subject at a minimum to civil penalties and to possible criminal penalties as well. UK's Financial Conduct Authority has the responsibility to investigate and prosecute insider dealing, defined by the Criminal Justice Act 1993.

Definition of "insider"
In the United States, Canada, Australia, Germany and Romania for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors and any beneficial owners of more than 10% of a class of the company's equity securities. Trades made by these types of insiders in the company's own stock, based on material non-public information, are considered fraudulent since the insiders are violating the fiduciary duty that they owe to the shareholders. The corporate insider, simply by accepting employment, has undertaken a legal obligation to the shareholders to put the shareholders' interests before their own, in matters related to the corporation. When insiders buy or sell based upon company-owned information, they are said to be violating their obligation to the shareholders.

For example, illegal insider trading would occur if the chief executive officer of Company A learned (prior to a public announcement) that Company A will be taken over and then bought shares in Company A while knowing that the share price would likely rise.

In the United States and many other jurisdictions, however, "insiders" are not just limited to corporate officials and major shareholders where illegal insider trading is concerned but can include any individual who trades shares based on material non-public information in violation of some duty of trust. This duty may be imputed; for example, in many jurisdictions, in cases of where a corporate insider "tips" a friend about non-public information likely to have an effect on the company's share price, the duty the corporate insider owes the company is now imputed to the friend and the friend violates a duty to the company if he trades on the basis of this information.

Liability
Liability for inside trading violations generally cannot be avoided by passing on the information in an "I scratch your back; you scratch mine" or quid pro quo arrangement if the person receiving the information knew or should have known that the information was material non-public information. In the United States, at least one court has indicated that the insider who releases the non-public information must have done so for an improper purpose. In the case of a person who receives the insider information (called the "tippee"), the tippee must also have been aware that the insider released the information for an improper purpose.

One commentator has argued that if Company A's CEO did not trade on undisclosed takeover news, but instead passed the information on to his brother-in-law who traded on it, illegal insider trading would still have occurred (albeit by proxy, by passing it on to a "non-insider" so Company A's CEO would not get his hands dirty).

Misappropriation theory
A newer view of insider trading, the misappropriation theory, is now accepted in U.S. law. It states that anyone who misappropriates material non-public information and trades on that information in any stock may be guilty of insider trading. This can include elucidating material non-public information from an insider with the intention of trading on it, or passing it on to someone who will.

Proof of responsibility
Proving that someone has been responsible for a trade can be difficult because traders may try to hide behind nominees, offshore companies, and other proxies. The Securities and Exchange Commission (SEC) prosecutes over 50 cases each year, with many being settled administratively out of court. The SEC and several stock exchanges actively monitor trading, looking for suspicious activity. The SEC does not have criminal enforcement authority, but can refer serious matters to the U.S. Attorney's Office for further investigation and prosecution.

Trading on information in general
In the United States and most non-European jurisdictions not all trading on non-public information is illegal insider trading. For example, a person in a restaurant who hears the CEO of Company A at the next table tell the CFO that the company's profits will be higher than expected and then buys the stock is not guilty of insider trading—unless he or she had some closer connection to the company or company officers. However, even where the tippee is not himself an insider, where the tippee knows that the information is non-public and the information is paid for, or the tipper receives a benefit for giving it, then in the broader-scope jurisdictions the subsequent trading is illegal.

Notwithstanding, information about a tender offer (usually regarding a merger or acquisition) is held to a higher standard. If this type of information is obtained (directly or indirectly) and there is reason to believe it is nonpublic, there is a duty to disclose it or abstain from trading.

In the United States in addition to civil penalties, the trader may also be subject to criminal prosecution for fraud or where SEC regulations have been broken, the U.S. Department of Justice (DOJ) may be called to conduct an independent parallel investigation. If the DOJ finds criminal wrongdoing, the department may file criminal charges.

Legal
Legal trades by insiders are common, as employees of publicly traded corporations often have stock or stock options. These trades are made public in the United States through Securities and Exchange Commission filings, mainly Form 4.

U.S. SEC Rule 10b5-1 clarified that the prohibition against insider trading does not require proof that an insider actually used material nonpublic information when conducting a trade; possession of such information alone is sufficient to violate the provision, and the SEC would infer that an insider in possession of material nonpublic information used this information when conducting a trade. However, SEC Rule 10b5-1 also created for insiders an affirmative defense if the insider can demonstrate that the trades conducted on behalf of the insider were conducted as part of a pre-existing contract or written binding plan for trading in the future.

For example, if an insider expects to retire after a specific period of time and, as part of retirement planning, the insider has adopted a written binding plan to sell a specific amount of the company's stock every month for two years, and the insider later comes into possession of material nonpublic information about the company, trades based on the original plan might not constitute prohibited insider trading.

United States law
Until the 21st century and the European Union's market abuse laws, the United States was the leading country in prohibiting insider trading made on the basis of material non-public information. Thomas Newkirk and Melissa Robertson of the SEC summarize the development of US insider trading laws. Insider trading has a base offense level of 8, which puts it in Zone A under the U.S. Sentencing Guidelines. This means that first-time offenders are eligible to receive probation rather than incarceration.

Statutory
U.S. insider trading prohibitions are based on English and American common law prohibitions against fraud. In 1909, well before the Securities Exchange Act was passed, the United States Supreme Court ruled that a corporate director who bought that company's stock when he knew the stock's price was about to increase committed fraud by buying but not disclosing his inside information.

Section 15 of the Securities Act of 1933 contained prohibitions of fraud in the sale of securities, later greatly strengthened by the Securities Exchange Act of 1934.

Section 16(b) of the Securities Exchange Act of 1934 prohibits short-swing profits (from any purchases and sales within any six-month period) made by corporate directors, officers, or stockholders owning more than 10% of a firm's shares. Under Section 10(b) of the 1934 Act, SEC Rule 10b-5, prohibits fraud related to securities trading.

The Insider Trading Sanctions Act of 1984 and the Insider Trading and Securities Fraud Enforcement Act of 1988 place penalties for illegal insider trading as high as three times the amount of profit gained or loss avoided from the illegal trading.

SEC regulations
SEC regulation FD ("Fair Disclosure") requires that if a company intentionally discloses material non-public information to one person, it must simultaneously disclose that information to the public at large. In the case of an unintentional disclosure of material non-public information to one person, the company must make a public disclosure "promptly".

Insider trading, or similar practices, are also regulated by the SEC under its rules on takeovers and tender offers under the Williams Act.

Court decisions
Much of the development of insider trading law has resulted from court decisions.

In 1909, the Supreme Court of the United States ruled in Strong v. Repide that a director who expects to act in a way that affects the value of shares cannot use that knowledge to acquire shares from those who do not know of the expected action. Even though, in general, ordinary relations between directors and shareholders in a business corporation are not of such a fiduciary nature as to make it the duty of a director to disclose to a shareholder general knowledge regarding the value of the shares of the company before he purchases any from a shareholder, some cases involve special facts that impose such duty.

In 1968, the Second Circuit Court of Appeals advanced a "level playing field" theory of insider trading in SEC v. Texas Gulf Sulphur Co. The court stated that anyone in possession of inside information must either disclose the information or refrain from trading. Officers of the Texas Gulf Sulphur Company had used inside information about the discovery of the Kidd Mine to make profits by buying shares and call options on company stock.

In 1984, the Supreme Court of the United States ruled in the case of Dirks v. Securities and Exchange Commission that tippees (receivers of second-hand information) are liable if they had reason to believe that the tipper had breached a fiduciary duty in disclosing confidential information. One such example would be if the tipper received any personal benefit from the disclosure, thereby breaching his or her duty of loyalty to the company. In Dirks, the "tippee" received confidential information from an insider, a former employee of a company. The reason the insider disclosed the information to the tippee, and the reason the tippee disclosed the information to third parties, was to blow the whistle on massive fraud at the company. As a result of the tippee's efforts the fraud was uncovered, and the company went into bankruptcy. But, while the tippee had given the "inside" information to clients who made profits from the information, the U.S. Supreme Court ruled that the tippee could not be held liable under the federal securities laws—for the simple reason that the insider from whom he received the information was not releasing the information for an improper purpose (a personal benefit), but rather for the purpose of exposing the fraud. The Supreme Court ruled that the tippee could not have been aiding and abetting a securities law violation committed by the insider—for the simple reason that no securities law violation had been committed by the insider.

In Dirks, the Supreme Court also defined the concept of "constructive insiders", who are lawyers, investment bankers, and others who receive confidential information from a corporation while providing services to the corporation. Constructive insiders are also liable for insider trading violations if the corporation expects the information to remain confidential, since they acquire the fiduciary duties of the true insider.

The next expansion of insider trading liability came in SEC vs. Materia 745 F.2d 197 (2d Cir. 1984), the case that first introduced the misappropriation theory of liability for insider trading. Materia, a financial printing firm proofreader, and clearly not an insider by any definition, was found to have determined the identity of takeover targets based on proofreading tender offer documents in the course of his employment. After a two-week trial, the district court found him liable for insider trading, and the Second Circuit Court of Appeals affirmed holding that the theft of information from an employer, and the use of that information to purchase or sell securities in another entity, constituted a fraud in connection with the purchase or sale of a securities. The misappropriation theory of insider trading was born, and liability further expanded to encompass a larger group of outsiders.

In United States v. Carpenter (1986) the U.S. Supreme Court cited an earlier ruling while unanimously upholding mail and wire fraud convictions for a defendant who received his information from a journalist rather than from the company itself. The journalist R. Foster Winans was also convicted, on the grounds that he had misappropriated information belonging to his employer, the Wall Street Journal. In that widely publicized case, Winans traded in advance of "Heard on the Street" columns appearing in the Journal.

The Court stated in Carpenter: "It is well established, as a general proposition, that a person who acquires special knowledge or information by virtue of a confidential or fiduciary relationship with another is not free to exploit that knowledge or information for his own personal benefit but must account to his principal for any profits derived therefrom."

However, in upholding the securities fraud (insider trading) convictions, the justices were evenly split.

In 1997, the U.S. Supreme Court adopted the misappropriation theory of insider trading in United States v. O'Hagan, 521 U.S. 642, 655 (1997). O'Hagan was a partner in a law firm representing Grand Metropolitan, while it was considering a tender offer for Pillsbury Company. O'Hagan used this inside information by buying call options on Pillsbury stock, resulting in profits of over $4.3 million. O'Hagan claimed that neither he nor his firm owed a fiduciary duty to Pillsbury, so he did not commit fraud by purchasing Pillsbury options.

The Court rejected O'Hagan's arguments and upheld his conviction.

The "misappropriation theory" holds that a person commits fraud "in connection with" a securities transaction and thereby violates 10(b) and Rule 10b-5, when he misappropriates confidential information for securities trading purposes, in breach of a duty owed to the source of the information. Under this theory, a fiduciary's undisclosed, self-serving use of a principal's information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, defrauds the principal of the exclusive use of the information. In lieu of premising liability on a fiduciary relationship between company insider and purchaser or seller of the company's stock, the misappropriation theory premises liability on a fiduciary-turned-trader's deception of those who entrusted him with access to confidential information.

The Court specifically recognized that a corporation's information is its property: "A company's confidential information ... qualifies as property to which the company has a right of exclusive use. The undisclosed misappropriation of such information in violation of a fiduciary duty ... constitutes fraud akin to embezzlement – the fraudulent appropriation to one's own use of the money or goods entrusted to one's care by another."

In 2000, the SEC enacted SEC Rule 10b5-1, which defined trading "on the basis of" inside information as any time a person trades while aware of material nonpublic information. It is no longer a defense for one to say that one would have made the trade anyway. The rule also created an affirmative defense for pre-planned trades.

In Morgan Stanley v. Skowron, 989 F. Supp. 2d 356 (S.D.N.Y. 2013), applying New York's faithless servant doctrine, the court held that a hedge fund's portfolio manager engaging in insider trading in violation of his company's code of conduct, which also required him to report his misconduct, must repay his employer the full $31 million his employer paid him as compensation during his period of faithlessness. The court called the insider trading the "ultimate abuse of a portfolio manager's position". The judge also wrote: "In addition to exposing Morgan Stanley to government investigations and direct financial losses, Skowron's behavior damaged the firm's reputation, a valuable corporate asset."

In 2014, in the case of United States v. Newman, the United States Court of Appeals for the Second Circuit cited the Supreme Court's decision in Dirks, and ruled that for a "tippee" (a person who used information they received from an insider) to be guilty of insider trading, the tippee must have been aware not only that the information was insider information, but must also have been aware that the insider released the information for an improper purpose (such as a personal benefit). The Court concluded that the insider's breach of a fiduciary duty not to release confidential information—in the absence of an improper purpose on the part of the insider—is not enough to impose criminal liability on either the insider or the tippee.

In 2016, in the case of Salman v. United States, the U.S. Supreme Court held that the benefit a tipper must receive as predicate for an insider-trader prosecution of a tippee need not be pecuniary, and that giving a 'gift' of a tip to a family member is presumptively an act for the personal though intangible benefit of the tipper.

By members of Congress
Members of the US Congress are exempt from the laws that ban insider trading. Because they generally do not have a confidential relationship with the source of the information they receive, however, they do not meet the usual definition of an "insider". House of Representatives rules may however consider congressional insider trading unethical. A 2004 study found that stock sales and purchases by Senators outperformed the market by 12.3% per year. Peter Schweizer points out several examples of insider trading by members of Congress, including action taken by Spencer Bachus following a private, behind-the-doors meeting on the evening of September 18, 2008 when Hank Paulson and Ben Bernanke informed members of Congress about the issues due to the financial crisis of 2007–2008, Bachus then shorted stocks the next morning and cashed in his profits within a week. Also attending the same meeting were Senator Dick Durbin and John Boehner; the same day (trade effective the next day), Durbin sold mutual-fund shares worth $42,696, and reinvested it all with Warren Buffett.  Also the same day (trade effective the next day), Congressman Boehner cashed out of an equity mutual fund.

In May 2007, a bill entitled the Stop Trading on Congressional Knowledge Act, or STOCK Act was introduced that would hold congressional and federal employees liable for stock trades they made using information they gained through their jobs and also regulate analysts or political intelligence firms that research government activities. The STOCK Act was enacted on April 4, 2012. As of 2021, in the approximately nine month period up to September 2021, Senate and House members disclosed 4,000 trades worth at least $315 million of stocks and bonds.

Arguments for legalizing
Some economists and legal scholars (such as Henry Manne, Milton Friedman, Thomas Sowell, Daniel Fischel, and Frank H. Easterbrook) have argued that laws against insider trading should be repealed. They claim that insider trading based on material nonpublic information benefits investors, in general, by more quickly introducing new information into the market.

Friedman, laureate of the Nobel Memorial Prize in Economics, said: "You want more insider trading, not less. You want to give the people most likely to have knowledge about deficiencies of the company an incentive to make the public aware of that." Friedman did not believe that the trader should be required to make his trade known to the public, because the buying or selling pressure itself is information for the market.

Other critics argue that insider trading is a victimless act: a willing buyer and a willing seller agree to trade property that the seller rightfully owns, with no prior contract (according to this view) having been made between the parties to refrain from trading if there is asymmetric information. The Atlantic has described the process as "arguably the closest thing that modern finance has to a victimless crime".

Legalization advocates also question why "trading" where one party has more information than the other is legal in other markets, such as real estate, but not in the stock market. For example, if a geologist knows there is a high likelihood of the discovery of petroleum under Farmer Smith's land, he may be entitled to make Smith an offer for the land, and buy it, without first telling Farmer Smith of the geological data.

Advocates of legalization make free speech arguments. Punishment for communicating about a development pertinent to the next day's stock price might seem an act of censorship. If the information being conveyed is proprietary information and the corporate insider has contracted to not expose it, he has no more right to communicate it than he would to tell others about the company's confidential new product designs, formulas, or bank account passwords.

Some authors have used these arguments to propose legalizing insider trading on negative information (but not on positive information). Since negative information is often withheld from the market, trading on such information has a higher value for the market than trading on positive information.

There are very limited laws against "insider trading" in the commodities markets if, for no other reason than that the concept of an "insider" is not immediately analogous to commodities themselves (corn, wheat, steel, etc.). However, analogous activities such as front running are illegal under US commodity and futures trading laws. For example, a commodity broker can be charged with fraud for receiving  a large purchase order from a client (one likely to affect the price of that commodity) and then purchasing that commodity before executing the client's order to benefit from the anticipated price increase.

Commercialisation
The advent of the Internet has provided a forum for the commercialisation of trading on insider information. In 2016 a number of dark web sites were identified as marketplaces where such non-public information was bought and sold. At least one such site used bitcoins to avoid currency restrictions and to impede tracking. Such sites also provide a place for soliciting for corporate informants, where non-public information may be used for purposes other than stock trading.

Legal differences among jurisdictions
The US and the UK vary in the way the law is interpreted and applied with regard to insider trading. In the UK, the relevant laws are the Criminal Justice Act 1993, Part V, Schedule 1; the Financial Services and Markets Act 2000, which defines an offence of "market abuse"; and the European Union Regulation No 596/2014. The principle is that it is illegal to trade on the basis of market-sensitive information that is not generally known.  This is a much broader scope that under U.S. law. The key differences from U.S. law are that no relationship to either the issuer of the security or the tipster is required; all that is required is that the guilty party traded (or caused trading) whilst having inside information, and there is no scienter requirement under UK law.

Japan enacted its first law against insider trading in 1988. Roderick Seeman said, "Even today many Japanese do not understand why this is illegal. Indeed, previously it was regarded as common sense to make a profit from your knowledge."

In Malta the law follows the European broader scope model.  The relevant statute is the Prevention of Financial Markets Abuse Act of 2005, as amended. Earlier acts included the Financial Markets Abuse Act in 2002, and the Insider Dealing and Market Abuse Act of 1994.

The International Organization of Securities Commissions (IOSCO) paper on the "Objectives and Principles of Securities Regulation" (updated to 2003) states that the three objectives of good securities market regulation are investor protection, ensuring that markets are fair, efficient and transparent, and reducing systemic risk.

The discussion of these "Core Principles" state that "investor protection" in this context means "Investors should be protected from misleading, manipulative or fraudulent practices, including insider trading, front running or trading ahead of customers and the misuse of client assets." More than 85 percent of the world's securities and commodities market regulators are members of IOSCO and have signed on to these Core Principles.

The World Bank and International Monetary Fund now use the IOSCO Core Principles in reviewing the financial health of different country's regulatory systems as part of these organization's financial sector assessment program, so laws against insider trading based on non-public information are now expected by the international community. Enforcement of insider trading laws varies widely from country to country, but the vast majority of jurisdictions now outlaw the practice, at least in principle.

Larry Harris claims that differences in the effectiveness with which countries restrict insider trading help to explain the differences in executive compensation among those countries. The US, for example, has much higher CEO salaries than have Japan or Germany, where insider trading is less effectively restrained.

By nation

European Union
In 2014, the European Union (EU) adopted legislation (Criminal Sanctions for Market Abuse Directive) that harmonised criminal sanctions for insider dealing. All EU Member States agreed to introduce maximum prison sentences of at least four years for serious cases of market manipulation and insider dealing, and at least two years for improper disclosure of insider information.

Australia
The current Australian legislation arose out of the report of a 1989 parliamentary committee report which recommended removal of the requirement that the trader be ‘connected’ with the body corporate.  This may have weakened the importance of the fiduciary duty rationale and possibly brought new potential offenders within its ambit.  In Australia if a person possesses inside information and knows, or ought reasonably to know, that the information is not generally available and is materially price sensitive then the insider must not trade.  Nor must she or he procure another to trade and must not tip another.  Information will be considered generally available if it consists of readily observable matter or it has been made known to common investors and a reasonable period for it to be disseminated among such investors has elapsed.

Norway
In 2009, a journalist in Nettavisen (Thomas Gulbrandsen) was sentenced to 4 months in prison for insider trading.

The longest prison sentence in a Norwegian trial where the main charge was insider trading, was for eight years (two suspended) when Alain Angelil was convicted in a district court on December 9, 2011.

United Kingdom

Although insider trading in the UK has been illegal since 1980, it proved difficult to successfully prosecute individuals accused of insider trading. There were a number of notorious cases where individuals were able to escape prosecution. Instead the UK regulators relied on a series of fines to punish market abuses.

These fines were widely perceived as an ineffective deterrent (Cole, 2007), and there was a statement of intent by the UK regulator (the Financial Services Authority) to use its powers to enforce the legislation (specifically the Financial Services and Markets Act 2000). Between 2009 and 2012 the FSA secured 14 convictions in relation to insider dealing.

United States
Anil Kumar, a senior partner at management consulting firm McKinsey & Company, pleaded guilty in 2010 to insider trading in a "descent from the pinnacle of the business world".

Chip Skowron, a hedge fund co-portfolio manager of FrontPoint Partners LLC's health care funds, was convicted of insider trading in 2011, for which he served five years in prison. He had been tipped off by a consultant to a company that the company was about to make a negative announcement regarding its clinical trial for a drug. At first Skowron denied the charges against him, and his defense attorney said he would plead not guilty, saying "We look forward to responding to the allegations more fully in court at the appropriate time". However, after the consultant charged with tipping him off pleaded guilty, he changed his position, and admitted his guilt.

Rajat Gupta, who had been managing partner of McKinsey & Co. and a director at Goldman Sachs Group Inc. and Procter & Gamble Co., was convicted by a federal jury in 2012 and sentence to two years in prison for leaking inside information to hedge fund manager Raj Rajaratnam who was sentenced to 11 years in prison. The case was prosecuted by the office of United States Attorney for the Southern District of New York Preet Bharara.

Mathew Martoma, former hedge fund trader and portfolio manager at S.A.C. Capital Advisors, was accused of generating possibly the largest single insider trading transaction profit in history at a value of $276 million. He was convicted in February 2014, and is serving a nine-year prison sentence.

With the guilty plea by Perkins Hixon in 2014 for insider trading from 2010 to 2013 while at Evercore Partners, Bharara said in a press release that 250 defendants whom his office had charged since August 2009 had now been convicted.

On December 10, 2014, a federal appeals court overturned the insider trading convictions of two former hedge fund traders, Todd Newman and Anthony Chiasson, based on the "erroneous" instructions given to jurors by the trial judge. The decision was expected to affect the appeal of the separate insider-trading conviction of former SAC Capital portfolio manager Michael Steinberg and the U.S. Attorney and the SEC in 2015 did drop their cases against Steinberg and others.

In 2016, Sean Stewart, a former managing director at Perella Weinberg Partners LP and vice president at JPMorgan Chase, was convicted on allegations he tipped his father on pending health-care deals. The father, Robert Stewart, previously had pleaded guilty but didn't testify during his son's trial. It was argued that by way of compensation for the tip, the father had paid more than $10,000 for Sean's wedding photographer.

In 2017, Billy Walters, Las Vegas sports bettor, was convicted of making $40 million on private information of Dallas-based dairy processing company Dean Foods, and sentenced to five years in prison. Walters's source, company director Thomas C. Davis employing a prepaid cell phone and sometimes the code words "Dallas Cowboys" for Dean Foods, helped him from 2008 to 2014 realize profits and avoid losses in the stock, the federal jury found. Golfer Phil Mickelson "was also mentioned during the trial as someone who had traded in Dean Foods shares and once owed nearly $2 million in gambling debts to" Walters. Mickelson "made roughly $1 million trading Dean Foods shares; he agreed to forfeit those profits in a related civil case brought by the Securities and Exchange Commission". Walters appealed the verdict, but in December 2018 his conviction was upheld by the 2nd U.S. Circuit Court of Appeals in Manhattan.

Canada
In 2008, police uncovered an insider trading conspiracy involving Bay Street and Wall Street lawyer Gil Cornblum who had worked at Sullivan & Cromwell and was working at Dorsey & Whitney, and a former lawyer, Stan Grmovsek, who were found to have gained over $10 million in illegal profits over a 14-year span. Cornblum committed suicide by jumping from a bridge as he was under investigation and shortly before he was to be arrested but before criminal charges were laid against him, one day before his alleged co-conspirator Grmovsek pled guilty. Grmovsek pleaded guilty to insider trading and was sentenced to 39 months in prison. This was the longest term ever imposed for insider trading in Canada. These crimes were explored in Mark Coakley's 2011 non-fiction book, Tip and Trade.

Kuwait
The U.S. SEC alleged that in 2009 Kuwaiti trader Hazem Al-Braikan engaged in insider trading after misleading the public about possible takeover bids for two companies. Three days after Al-Braikan was sued by the SEC, he was found dead of a gunshot wound to the head in his home in Kuwait City on July 26, 2009, in what Kuwaiti police called a suicide. The SEC later reached a $6.5 million settlement of civil insider trading charges, with his estate and others.

China
The majority of shares in China before 2005 were non-tradeable shares that were not sold on the stock exchange publicly but privately. To make shares more accessible, the China Securities Regulation Commission (CSRC) required the companies to convert the non-tradeable shares into tradeable shares. There was a deadline for companies to convert their shares and the deadline was short, due to this there was a massive amount of exchanges and in the midst of these exchanges many people committed insider trading knowing that the selling of these shares would affect prices. Chinese people did not fear insider trading as much as one may in the United States because there is no possibility of imprisonment. Punishment may include monetary fees or temporary relieving from a position in the company. The Chinese do not view insider trading as a crime worth prison time because generally the person has a clean record and a path of success with references to deter them from being viewed as a criminal. On October 1, 2015, Chinese fund manager Xu Xiang was arrested due to insider trading.

India
Insider trading in India is an offense according to Sections 12A, 15G of the Securities and Exchange Board of India Act, 1992. Insider trading is when one with access to non-public, price-sensitive information about the securities of the company subscribes, buys, sells, or deals, or agrees to do so or counsels another to do so as principal or agent. Price-sensitive information is information that materially affects the value of the securities. The penalty for insider trading is imprisonment, which may extend to five years, and a minimum of five lakh rupees (500,000) to 25 crore rupees (250 million) or three times the profit made, whichever is higher.

The Wall Street Journal, in a 2014 article entitled "Why It’s Hard to Catch India’s Insider Trading", said that despite a widespread belief that insider trading takes place on a regular basis in India, there were few examples of insider traders being prosecuted in India. One former top regulator said that in India insider trading is deeply rooted and especially rampant because regulators don't have the tools to address it. In the few cases where prosecution has taken place, cases have sometimes taken more than a decade to reach trial, and punishments have been light; and despite SEBI by law having the ability to demand penalties of up to $4 million, the few fines that were levied for insider trading have usually been under $200,000.

Philippines
Under Republic Act 8799 or the Securities Regulation Code, insider trading in the Philippines is illegal.

See also

Notes

References
 Mark J. Astarita, Insider Trading: Legal vs. Illegal Insider trading: Legal vs. Illegal,
 Stephen M. Bainbridge, Securities Law: Insider Trading (1999) .
 M. Duffy, Insider Trading: Addressing the Continuing Problems of Proof (2009) 23(2) Australian Journal of Corporate Law 149. (link).
 Larry Harris, Trading & Exchanges, Oxford Press, Oxford, 2003. Chapter 29 "Insider Trading" .
 Grechenig, The Marginal Incentive of Insider Trading: an Economics Reinterpretation of the Case Law, 37 The University of Memphis Law Review 75-148 (2006) (link).
 
 Review of Financial Studies; May2009, Vol. 22 Issue 5, pp. 1845–1887
 Grechenig, Positive and Negative Information – Insider Trading Rethought
 Pierre Hauck, Europe’s commitment to countering insider dealing and market manipulation on the basis of Art. 83 para. 2 TFEU A critical evaluation
International Standard Book Number-13: 978-1-4200-7403-1 (eBook - PDF)

External links

General information
 Insider Trading Informational page from the U.S. Security and Exchange Commission (SEC)
 Testimony Concerning Insider Trading, by Linda Thomsen, Director of the SEC's Division of Enforcement, before the U.S. Senate Judicial Committee (September 26, 2006)
 SEC Forms 3, 4 and 5
 Insider Trading: Information on Bounties
Hoffman, Liz, "Towers Watson CEO Sold Stock Before Big Deal: John Haley netted nearly $10 million on preannouncement sales", Wall Street Journal, September 23, 2015. Towers Watson CEO John J. Haley's pre-deal sale of personally owned stock questioned.

Articles and opinions
 Insider Trading: The Legal and Illegal SECLaw.com, 2002
 Timothy Sullivan We're still against fraud, aren't we? United States v. O'Hagan: Trimming the Oak in the wrong season St. John's Law Review, Winter 1997.
 An opinion on Why Insider Trading Should be Legal Larry Elder Interviews Henry Manne
 Why forbid insider trading? by Ajay Shah, consultant to the Ministry of Finance, India
 Information, Privilege, Opportunity and Insider Trading by Robert W. Mcgee and Walter E. Blocka scholarly work that opposes regulations against insider trading
 Free Samuel Waksal argues that businessman's insider trading should not be considered a crime
 Rule: Ownership Reports and Trading by Officers, Directors and Principal Security

Data on insider trading
 SEC Edgar Database on current Form 3, Form 4 and Form 5 filings

 
Corruption
Financial crimes
Stock market
Ethically disputed business practices
Conflict of interest
Information The mosaic theory in finance involves the use of security analyst personnel to gather information about a company or corporation to evaluate and determine its financial stability. In addition to public information available to all investors, securities analysts also have access to non-public information which the vast majority of investors do not possess. Trading based on such non-public information can be considered illegal if the information is also material, as defined by insider trading laws.

Theory

By gathering various non-material information, often from sources at or close to the issuing corporation, an analyst can draw useful conclusions about the current and future health of the company, allowing them to profit from transacting in shares of its stock and related derivative contracts.  However, extrapolating conclusions from a "mosaic" of such bits of non-public information can be vague, sometimes leading analysts to false conclusions about the corporation.  Security analysts then have to sort through the data collected and make recommendations to their clients or keep the information to themselves to use later for personal profit based on determining the underlying value of a company's securities.

SEC and guideline
Since the Commission's Fair Disclosure rule (Reg FD) was enacted, the viability of the mosaic theory has been retained within the United States under the Securities and Exchange Commission [2]. Broadly speaking, the SEC requires public corporations to register their stock sales and protects investors in the municipal securities markets. Though it was not created by the Securities and Exchange Commission, it has placed a judicially imposed limitation on the information gathered by insider trading.  If the U.S. Securities and Exchange Commission deems that there is illegal insider trading, they can freeze assets tied to the company's shares. The Securities and Exchange Commission explains that this nonpublic information, known as research to the security analysts, isn't banned from “disclosing a non-material piece of information to an analyst, even if, unbeknownst to the issuer, that piece helps the analyst complete a "mosaic" of information that, taken together, is material”. The SEC constantly are evaluating trends and when unknown traders purchase equity call options that are millions of dollars.  The SEC can freeze accounts on suspicion of illegal insider trading when the accuracy and validity of information may be incorrect within the marketplace.  This had led to the legality of insider trading laws to be under intense scrutiny. Though it is legal under the United States Federal insider laws to utilize the mosaic information that is obtained by a securities analyst, it must be within the guidelines of the confidentiality that the company or corporation created. For most companies within the United States and do business with the United States, these guidelines of confidentiality are required. Some of the controls that have mitigated the potential of illegal trading within the mosaic theory include the interactions between a company and consultants, notification in connection with approved consultants, remaining alert to potential issues, compliance oversight, information barriers, and being within the SEC guidelines. These guidelines have made companies more transparent with their financial stability to the general public.

Practical use
Under insider trading laws, analysts may not use material non-public information to help select their trades. But traders might be able to piece together non-material non-public information and material public information into a mosaic, which may increase in value when properly compiled and documented. The theory is also referred to more colloquially as the scuttlebutt method by Philip Fisher in Common Stocks and Uncommon Profits.

Mosaic theory involves collecting information from different sources, public and private, to calculate the value of security. Applying the mosaic theory is as much art as it is science. An analyst gleans as many pieces of information as possible, determines if they tell a story that makes sense, and decides whether to recommend a trade.

It is also a legal theory used to uphold the classification of information, holding that a collection of unclassified information might add up to a classified whole. The theory has also been applied to legal reasoning in the context of the Fourth Amendment where the continuous use of GPS surveillance was found to violate the subject's "reasonable expectation of privacy".

Legality of the Mosaic Theory 
Though the Supreme Court recognized the legality of the Mosaic Theory in Dirks v. SEC, the concerns have arisen with the potential of illegal insider trading happening within analysis. Analysts can take advantage of vague insider trading laws and this brings of the legality of it. Securities analysts can obtain non disclosed information from company insiders that an average investor cannot. Under insider trading law, this advantage is an unlawful method. To combat this issue, confidentiality agreements as well as operating under internal policy guidelines are in place. Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5 falls under the category when unknown traders purchase equity call options that are millions of dollars.

The mosaic theory relies heavily on the U.S. economy's fluctuation and stock market. Without public corporations being transparent, the mosaic theory would be ineffective and the stock market would be vulnerable to sudden shifts as hidden information comes out. Thus, it is illegal for United States public companies to not be transparent with their corporate profitability.

Court Cases 
In May 2011, US District Judge Richard J. Howell sentenced Raj Rajaratnam, the founder of the Galleon Group hedge fund, to eleven years in prison who was found guilty of fourteen counts of insider trading. During the high-profile trial of investor Raj Rajaratnam, defense attorneys used the mosaic theory to argue against allegations of insider trading. These arguments were ultimately unsuccessful. Though it was ten years shorter than the requested amount of time, it constitutes as the longest prison sentence given to an insider trading case. Under the Securities Exchange Acts15 USC §78j(b) and 17 CFR §240.10b-5, Rajaratnam and other Galleon traders were convicted with fraud and conspiracy. They profited tens of millions of dollars of insider trading and based their arguments off of the mosaic theory. So far, this is the only court case that has used the mosaic theory in court to validate insider trading in the court of law.

See also
 Stock valuation
 Classified information in the United States
 Freedom of Information Act (United States)
 Enron scandal
 Mosaic theory (US law)

References 

Stock market
Classified information