Cuban PIPE
Posted on November 18, 2008
Filed Under Uncategorized |
The linked post is a great explanation of the Mark Cuban insider trading case announced by the SEC yesterday. Also, it’s worth pointing out that this is a civil case as opposed to a Martha Stewart criminal variety that could result in jail time. While many no doubt would be pleased to see Cuban locked up for a while, NBA Commish Stern comes to mind, the fact remains that this is a pretty technical case as opposed to the Stewart case.
Nonetheless, the post on Prof Bainbridge’s site provides an extraordinarily clear and concise explanation of what the case is all about, the kind of explanation that has thus far not been seen in media’s coverage.
In Cuban’s case, however, I suspect it was not greed but rather his legendary temper that did him in. The PIPE transaction Mamma.com planned would have involved the issuance of new shares at a below market price. It would have diluted the economic value and voting rights of Cuban and the other pre-PIPE investors. The complaint makes clear that Cuban was furious about the planned sale. His anger led him to a rash act, which now could result in serious civil fines. Whether the Justice Department will pursue criminal charges, as well, remains to be seen.
[From Law & Business | Professor Bainbridge]
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My name is Jeff Nolan and I write Venture Chronicles. These are my thoughts on technology, innovation, management, public policy and pretty much anything else that I find interesting.
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