The trial stems from allegations that Cuban engaged in the exchange of insider information with Guy Faure, the CEO of internet search company Mamma.com in 2004. The SEC says Cuban learned that the company was planning an offering of new stock and then used the information to quickly sell all 600,000 of his shares before they reduced in value. A Sunday AP report notes that Cuban avoided $750,000 in losses by using the information to dump the stock.
As for evidence, the SEC obtained a phone call between Cuban and Faure that implicated the Mavs owner. Cuban is expected to testify in the trial, while Faure's testimony has been pre-recorded since he lives in Montreal and cannot be subpoenaed to appear in Dallas.
The SEC also alleges that Cuban agreed to not act on the confidential information until it became available to all investors but unloaded the stock anyway. Faure's testimony reportedly also says the owner acknowledged that he could not sell upon learning of the new stock offering.
Cuban, on the other hand, has been involved in litigation with the SEC for nearly five years now and although he could easily settle out of court, as ESPN reports, Cuban is accusing the SEC of having a "pre-existing bias" against him that prompted an "utterly meritless case." He denies agreeing not to act on the inside information, as well as that the information is considered "insider."
Cuban has a new worth of over $2 billion and will bring a team of seven lawyers trained in stock trading law. Should the court rule in the SEC's favor, Cuban could face paying the $750,000 he avoided by getting rid of his shares plus nine years of interest and a fine of up to $2.25 million.