Mark Cuban filed a motion to dismiss the SEC’s insider trading case against him yesterday in the U.S. District Court for the Northern District of Texas. The SEC filed the case on November 17, charging Cuban with insider trading for selling 600,000 shares of the stock of the Internet search engine company Mamma.com on the basis of material, non-public information concerning an impending PIPE offering.
The SEC alleges that on a phone call with the CEO of Mamma.com, Cuban agreed to keep any information he received about the PIPE offering confidential and, by doing so, entered into a fiduciary relationship of trust and confidence with Mamma.com (as required for insider trading liability). In his motion to dismiss, Cuban argues that no court has ever held that a confidentiality agreement alone creates a fiduciary or fiduciary-like duty to act loyally to the source of the information,
