Drop the SEC Investigation Against Cuban
November 19, 2008
Washington, D.C. --Billionaire Mark Cuban is under investigation for “insider trading” by the SEC.
“This case is a travesty,” said Alex Epstein, an analyst at the Ayn Rand Center for Individual Rights. “Cuban is accused of selling his stock in Mamma.com after the CEO told Cuban that the company would be making a new stock offering that Cuban thought was a bad idea. But there is nothing wrong with this whatsoever--unless Cuban had a contractual obligation or fiduciary duty not to act on the information. And if Cuban violated a contract, which there is no evidence of, then that is the injured party’s--the company’s--job to pursue, not the SEC’s. In all likelihood, if there is anyone who violated a contractual obligation, it is the CEO who divulged confidential, unsolicited information--not the famous billionaire recipient who just happens to make a juicy target for SEC bureaucrats thirsting for another high-profile case to justify their regulatory power.
“The question of ‘insider trading’--when employees and investors of a company can act on certain information--should be left entirely up to private contract, such as restrictions on CEOs shorting their own stock. The criminalization of ‘insider trading’ has authorized the SEC to terrorize those whose only sin was to be a savvy investor. The Mark Cubans of the world deserve to be left free to make investment decisions under a government with clear laws against force, fraud, and breach of contract--not to spend years of their lives enduring witch hunts and prisons.”
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Alex Epstein was a writer and a fellow on staff
at ARI between 2004 and 2011.