Billionaire Mark Cuban, who is being sued by U.S. regulators for alleged insider trades in Mamma.com stock, said he saw "red flags" at the Montreal-based Internet search firm before he sold his shares.
In a Dallas federal court filing last week, the Mavericks owner said he needs access to U.S. Securities and Exchange Commission investigative documents on Mamma.com, now known as Copernic Inc., to fight the SEC suit filed against him in 2008.
The SEC accused Cuban of trading on confidential information when he sold his stake in Mamma.com just before it announced a private placement of shares.
In an Aug. 29 filing requesting that the SEC share more materials from an investigation of Mamma.com, Cuban said he had other reasons to sell.
"Mr. Cuban has repeatedly stated that he sold his shares in Mamma.com in part because he saw 'red flags' in the company and he began to suspect that the individuals involved with Mamma.com might be 'crooked,'" according to the filing, which states that the SEC was investigating Mamma.com "around this time."
Cuban, 53, who has denied wrongdoing, is requesting documents about the investigation, which his filing said was closed without action from the commission.
"This investigation into Mamma.com is highly relevant to Mr. Cuban's motivation for selling his shares and could fully substantiate Mr. Cuban's concerns about whether the individuals involved with Mamma.com were 'crooked,'" the court papers state.
Joel Villeneuve, a spokesman for Copernic, didn't immediately return a phone call seeking comment.
The SEC contends that in June 2004, Cuban found out about the company's plan to raise money through a private investment, which would significantly dilute his stake. He sold his shares, saving about $750,000 in losses, the commission said.
SEC spokesman John Nester declined to comment on the filing. Thomas Melsheimer, Cuban's lead attorney, didn't immediately return a telephone call seeking comment.
Aside from the Mavericks, Cuban owns the HDNet high-definition television channel and the Landmark Theater chain.