DALLAS â€" Mark Cuban sent out a series of e-mails saying that he had sold his shares in the search engine company Mamma.com because he had received information that the company was about to recruit private investors whose contributions would dilute the value of the public shares, a Securities and Exchange Commission lawyer said on Thursday.
But the lawyer, Jan Folena, and Mr. Cuban, the billionaire owner of the Dallas Mavericks basketball team, disagreed about whether the information about the private investors was confidential.
“You didn’t say anything else,†Ms. Folena said to Mr. Cuban. “You said you sold because of the private investment.â€
Mr. Cuban said these were examples of “stock responses†he is often forced to give because of the sheer volume of e-mail he receives.
The testimony came in a federal courthouse here, where Mr. Cuban faces insider trading charges filed by the S.E.C. If found liable, he faces a fine of about $2 million.
The underlying issue, Ms. Folena said, is that Mr. Cuban told the company’s chief executive, Guy Fauré, in a telephone call on June 28, 2004, that he would keep the information about the coming private investment in Mamma confidential Mr. Cuban was the biggest single investor in the company, owning 6.3 percent of its shares.
Then, Mr. Cuban took that information, the S.E.C. has said, and sold his 600,000 shares, avoiding $750,000 in losses. The company’s stock fell 9.3 percent on June 30, when the offering was announced. Mr. Cuban said that he never promised to keep any information he received from Mr. Fauré confidential. But he also said he did not recall exactly what was said during that call nine years ago.
“I would never agree to do something without knowing what it is I’m being ask to do,†Mr. Cuban said.
When speaking of confidentiality, Mr. Cuban was crystal clear. “If I agree to do something, I’m going to stick to my word,†he said. “I’m a very conservative investor,†Mr. Cuban said, adding, “I sold my shares knowing it was public information.â€
Ms. Folena asked if he had “conducted any research†about whether the forthcoming investment was yet in the public domain.
“I didn’t need to,†Mr. Cuban said. Mr. Cuban said he had never agreed orally to keep something confidential in business.
Late in the day, his defense lawyers asked him about his humble beginnings, with a father who worked on upholstery for cars and a mother who was a homemaker. They also discussed Mr. Cuban’s wife, three children, his first job in Dallas as a bartender and a second job at a software company, from which he was fired. They also discussed his philanthropic work.
