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Charges weaken Cuban's chances of buying Cubs
(Chicago Tribune Via Acquire Media NewsEdge) CHICAGO _ Insider-trading charges brought Monday against Mark Cuban, an Internet entrepreneur and owner of the Dallas Mavericks basketball team, could weaken his chances of buying the Chicago Cubs.
There was already some doubt whether other baseball owners would welcome the loud and brash self-made billionaire into their fraternity if he had the highest bid. Now, they have something to point to to deny him entry, said a sports economist familiar with baseball ownership decisions.
"I know he (Cuban) hasn't been convicted, but the charges give the commissioner's office another pretext for turning him down," said Andrew Zimbalist, an economics professor at Smith College.
Robert DuPuy, president of Major League Baseball, declined to comment.
If the charges effectively eliminate Cuban from Cubs auction, his absence would be the latest setback for the sales process that began when Chicago real estate investor Sam Zell reached a deal to acquire team owner Tribune Co., the media conglomerate, in April 2007.
Since then, a declining economy and tight credit markets have raised questions about whether Zell can complete a transaction once valued at more than $1 billion. Cuban's absence would further alter the dynamics of the auction, as other bidders were afraid he would try to win the team and Wrigley Field at any cost. "Mark was the wild card," said a person close to one of the bidders who asked to remain anonymous because the sales process is ongoing. "No one knew what he was going to do."
Other bidders include the Ricketts family, a founder of online brokerage TD Ameritrade Holding Corp., and Chicago real estate investor Hersch Klaff.
Tribune Co., owner of the Chicago Tribune, declined to comment.
Christopher Clark, a lawyer for Cuban, said the insider-trading charges should not hurt Cuban's involvement in the Cubs sale because the two matters are not connected.
Cuban, 50, did not respond to requests to comment beyond a statement that included he will fight the Securities and Exchange Commission charges.
The SEC's civil lawsuit, filed in Dallas, claims Cuban sold 600,000 shares of Internet search engine Mamma.com Inc. in 2004 based on nonpublic information about an impending private stock offering that threatened to reduce the market value of his holdings. By selling out, the suit alleges, Cuban avoided losses of more than $750,000.
Ralph Ferrara, another Cuban lawyer, said in a statement that the complaint "has no merit and is a product of gross abuse of prosecutorial discretion."
(EDITORS: STORY CAN END HERE)
Cuban, said in his statement, "I am disappointed that the commission chose to bring this case based upon its enforcement staff's win-at-any-cost ambitions. The staff's process was result-oriented, facts be damned. The government's claims are false and they will be proven to be so."
According to the complaint, Cuban acquired his shares in March 2004. The Montreal-based company has since changed its name Copernic Inc. and trades for less than a $1 a share.
On June 28, 2004, Cuban, who was the company's "largest known" shareholder with a 6 percent stake, was asked to participate in a private stock offering, the SEC said. The commission asserted that Mamma.com's chief executive told Cuban during a phone call to keep the offering information confidential.
Cuban, according to the complaint, said in the call that he did not like the private offering because it would dilute the value of existing shares and added, "Well, now I'm screwed. I can't sell."
Later that day, Cuban spoke to the company's investment adviser who told him the offered shares would be sold at a discount to the market price, the SEC alleged.
One minute after hanging up with the adviser, Cuban called his broker and instructed him to sell his stake in the company, the SEC said. That night and the next morning, June 29, his shares were sold for about $13 a share. After the markets closed on June 29, Mamma.com announced the private offering.
On June 30, its shares opened at $11.89, down 9.3 percent from its previous closing price, the SEC said.
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(c) 2008, Chicago Tribune.
Visit the Chicago Tribune on the Internet at http://www.chicagotribune.com/
Distributed by McClatchy-Tribune Information Services.
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Copyright ? 2008 Chicago Tribune
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