The SEC”s reputation, already hurt by its action or lack thereof during the credit crisis, took another blow when a federal judge rejected its $33 million settlement with Bank of America (NYSE:BAC). The SEC appeared to be prone to expending as little effort as possible by using negotiated terms to keep the case out of court.
Now the SEC is taking a hard position with the high profile target of one of its insider trading cases. Mark Cuban, the billionaire owner of the Dallas Mavericks, was hit by SEC charges last year. A federal judge dismissed the case.
Instead of letting the matter go, the SEC is appealing the judge’s decision. “We believe the District Court erred in dismissing our complaint,” a spokesman for the SEC said. Cuban’s lawyer shot back saying, “This appeal is nothing more than the SEC’s desperate attempt to shock a heartbeat into a case that was dead on arrival.”
Cuban can consider himself officially in deep trouble. The SEC appears hell bent to get him into court and, if it can, the agency will almost certainly bring the most serious charges against him that it can and ask for the most serious penalties.
The SEC needs a pound of flesh. Cuban had better hope that the appeal fails.
Douglas A. McIntyre