By Jonathan Stempel
(Reuters) - Mark Cuban, the billionaire owner of the National Basketball Association's Dallas Mavericks, on Tuesday lost a bid to throw out a U.S. regulator's civil fraud lawsuit accusing him of insider trading in a 2004 stock sale.
U.S. District Judge Sidney Fitzwater in Dallas said the U.S. Securities and Exchange Commission may continue to press its case against Cuban, which began more than four years ago.
The SEC said Cuban avoided more than $750,000 of losses by selling his 600,000 Mamma.com Inc shares in June 2004, after learning about an equity offering that would dilute his 6.3 percent stake in the Montreal-based search engine company.
Fitzwater said the question of whether the case against Cuban could be dismissed was "in some respects a close one," but that the SEC ultimately deserved a chance to present its arguments to a jury.
Cuban is worth $2.4 billion, Forbes magazine said this week.
Stephen Best and Lyle Roberts, who are lawyers for Cuban, did not immediately respond to requests for comment. A Mavericks spokeswoman declined to comment.
SEC spokesman John Nester said: "We look forward to proceeding with our insider trading case against Mr. Cuban in court."
Cuban has long denied wrongdoing and in court papers said there was no evidence the information about the equity offering was confidential or material.
Fitzwater had originally dismissed the SEC lawsuit in July 2009, but a federal appeals court revived the case in September 2010. Mamma.com later became known as Copernic Inc.
"WELL, NOW I'M SCREWED"
The SEC said the illegal sale occurred after Mamma.com Chief Executive Guy Faure told Cuban on June 28, 2004 of the company's planned private investment in public equity offering, or PIPE.
According to the SEC, Cuban became "very upset and angry" upon learning that the offering would be sold at a discount to the market price, diluting the holdings of existing shareholders like him.
"Well, now I'm screwed. I can't sell," Cuban told Faure, according to the SEC.
The SEC said Cuban then directed his broker to sell his Mamma.com shares, and completed the sale on June 29, 2004, hours before the company announced the PIPE offering. Mamma.com's share price fell 9.3 percent the following morning.
ALTERING THE MIX
Fitzwater said a reasonable jury could find that Cuban agreed at least implicitly not to trade on the PIPE information, and that the information disclosed to him was material.
Evidence submitted so far "would enable a reasonable jury to find that the PIPE information that Cuban possessed would have been viewed by a reasonable investor as having significantly altered the total mix of information made available about Mamma.com," Fitzwater wrote.
Apart from the Mavericks, Cuban's entertainment vehicles include the AXS TV television channel and the Landmark Theatres chain.
He has often appeared as himself on television shows, including on HBO's "Real Time with Bill Maher" and as a contestant on ABC's "Dancing with the Stars."
Cuban is also often seen on U.S. television sitting courtside among ordinary fans at Mavericks games, cheering on his team or yelling at officials. He has over the years amassed large NBA fines for criticizing the league and referees.
The Mavericks won the NBA title in 2011, but are at risk of missing the playoffs this season. Their 26-33 record is 11th-best in the league's Western Conference. Eight teams from each of the league's two conferences make the playoffs.
The case is SEC v. Cuban, U.S. District Court, Northern District of Texas, No. 08-02050.
(Reporting by Jonathan Stempel in New York; Editing by Gerald E. McCormick, Jeffrey Benkoe, David Gregorio and Andrew Hay)