In the three years since Mark Cuban beat Securities and Exchange Commission charges of insider trading, the billionaire has waged a very public battle against the agency.
He has lambasted Wall Street's chief regulator in interviews ("My buddies at the SEC have screwed it up so bad ") and once showed up unexpectedly to a 2014 meeting attended by SEC Chair Mary Jo White and tweeted about the proceedings ("There is a shocking lack of self-awareness at the SEC. Nothing is their fault.").
Now the outspoken Dallas Mavericks owner is coming to the aid of others who run afoul of the SEC by attacking the agency's use of in-house or administrative courts.
In amicus briefs filed in three federal cases, Cuban describes himself as qualified to weigh in on the issue because he was a "victim" of SEC overreach. The SEC accused the Cuban of trading on non-public information in 2004 when he sold 600,000 shares in a Canadian Internet company, Mamma.com, for $7.9 million. The trade allowed Cuban to avoid a $750,000 loss. A Dallas jury cleared Cuban of insider trading in 2013 after just three hours of deliberations and helped spark his multi-year critique of the agency.
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The 57-year-old earned his fortune, now estimated at about $3 billion, when he sold his start-up, Broadcast.com, to Yahoo for $5.9 billion in 1999. He is now a regular ABC's reality TV show, "Shark Tank," doling out money and advice to entrepreneurs.
"Mark Cuban is a successful businessman and investor who defeated an attempt by the [SEC] to sanction him as an 'insider trader' based on an incorrect legal theory and defective facts," Cuban attorneys argued in a brief filed with the U.S. Supreme Court last week.
That case involves a dispute directed to administrative court. Instead of filing a complaint in federal court, the SEC can choose to seek penalties against those accused of wrongdoing through an administrative judge. In 2010, Congress gave the agency more leeway in moving cases through its in-house justice system and defense attorneys have been complaining that the SEC was giving itself an unfair home-field advantage.
The administrative judge is picked by the Office of Personnel Management but works for the SEC's five-member commission.
The SEC declined to comment on Cuban's attacks on the agency, but has previously said that the administrative process has worked well for decades. Most cases heard before an in-house judge have already been settled and simply need judicial approval, agency officials have said. In a review of bias allegations against the administrative law judges, the SEC's Office of Inspector General said it "did not develop any evidence to support the allegations of improper influence."
The agency has said it is not afraid of trying cases before a jury.
"The Enforcement staff does not shy away from litigating in district court, where we have had great success . . . and we will continue to take tough cases to trial in both forums,"Andrew Ceresney, the director of the SEC's enforcement division, said during a speech before the New York City Bar last year.
But several defendants in SEC cases are challenging the agency's decision to litigate their cases before an in-house judge — and Cuban, whose case was heard by a jury, is weighing in.
In one case making its way through the court system, Georgia real estate developer Charles L. Hill Jr. is fighting to have his insider trading case heard in federal court. The SEC has accused him of obtaining an $740,000 profit by illegally trading in the shares of Radiant Systems based on a tip from a friend of a Radiant executive.
"Had Mr. Cuban been subjected to the treatment the SEC intends for Mr. Hill . . . Mr. Cuban likely would have been found liable by an in-house SEC [administrative law judge] on an untested legal theory and based on incomplete and misleading facts," Cuban's lawyers argue in a brief filed in the Hill case.
In a 20-page brief filed in Supreme Court last week, Cuban comes to the defense of Laurie A. Bebo, the former chief executive of Assisted Living Concepts. The SEC has accused Bebo of scheming to inflate the company's occupancy rates so it wouldn't default on its lease. Bebo is challenging the use of an administrative judge in her case.
"As a first-hand witness to and victim of SEC overreach, Mr. Cuban has an interest in supporting [Bebo]," the brief said. "Yet again, the SEC, in its zeal to win, has lost sight of its mission."
But even even the resolution of these cases may not be enough to satisfy Cuban. Asked when he would walk away from his battle with the SEC, Cuban said in an email: "When people have confidence in the markets. When small companies are excited to go public again. When there are bright line insider trading rules that are easy to understand . . .That will be [a] good starting point."