Tags: Cuban | insider | trading | SEC

Mark Cuban: SEC Should Forget About Insider Trading

By    |   Thursday, 03 April 2014 12:50 PM

The Securities and Exchange (SEC)'s battle against insider trading is a huge waste of taxpayer money that should be dropped, argues Mark Cuban, owner of the Dallas Mavericks and chairman of AXS TV.

The agency has lost millions of dollars in fruitless battles against alleged insider trading, Cuban writes in his blog.

Classic insider trading, where a CEO or director uses company information for personal profit, is wrong, Cuban concedes. But the SEC, striving to expand that definition, oversteps its bounds.

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In one SEC case, two Florida East Coast Railroad workers noticed that many "guys in suits" were touring the rail yard. They correctly guessed the railroad's fortunes were on the upswing. The SEC sued them for insider trading. It lost.

In the SEC vs. Schvacho, the agency went after Ladislav "Larry" Schvacho for insider trading for using information from a friend who was CEO of a company whose stock he was trading. "Both parties said under oath that they never discussed the stock and no Material Information about the company ever changed hands," Cuban notes.

The SEC lost that case, too. The judge urged SEC Chairman Mary Jo White to seek "a just result and not just a result."

The SEC says it wants to increase investor confidence in the markets. Investors plow trillions of dollars in equities around the world and don't even bother asking about a country's insider trading laws, Cuban argues.

"The point being that investors don't care about insider trading laws. They don't use it as investment criteria. They don't have concerns about it. It's not an issue."

If the SEC is really worried about insider trading, he says, it should be tackling Ponzi schemes, penny stock frauds and issues like high-speed trading.

"Leave insider trading to the Justice Department. Take all that money that the SEC wastes on insider trading civil litigation and put it to good use."

MarketWatch also expressed surprise at the SEC's continued focus on insider trading while markets, prompted by a new book by Michael Lewis, are consumed by allegations that high-frequency traders have rigged the market.

In a speech to the Securities Industry and Financial Markets Association, White talked a lot about insider trading and other topics, but didn't even mention high-frequency trading, MarketWatch reports.

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The Securities and Exchange (SEC)'s battle against insider trading is a huge waste of taxpayer money that should be dropped, argues Mark Cuban, owner of the Dallas Mavericks and chairman of AXS TV.
Cuban,insider,trading,SEC
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2014-50-03
Thursday, 03 April 2014 12:50 PM
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