Insider Trading Trial of Mavericks’ Owner Is Under Way

DALLAS â€" Mark Cuban is a “righteous man” whose stock trading practices are “inconsistent with someone who’s done something wrong.” Or he’s a brazen billionaire whose trading ran afoul of securities laws.

These dueling narratives were presented to a jury on Tuesday as the Securities and Exchange Commission and Mr. Cuban’s lawyers delivered opening arguments in his civil insider trading trial.

For more than two hours both sides outlined their arguments in what is likely to be a contentious courtroom battle, closely watched for the imposing personality that Mr. Cuban, the billionaire entrepreneur who owns the Dallas Mavericks basketball team, displays in the spotlight.

The trial, which opened this week at a federal courthouse in Dallas, stems from Mr. Cuban’s decision in June 2004 to dump his stake in the search engine Mamma.com. He did so after learning from Mamma.com’s chief executive that the company was planning a private offering of its stock â€" a deal likely to hurt the stock price and dilute the holdings of existing shareholders like Mr. Cuban.

By the S.E.C.’s account, Mr. Cuban’s trading amounted to fraud. The S.E.C. lawyer leading the case, Jan M. Folena, argued on Tuesday that Mr. Cuban agreed to keep the information confidential in a call with the firm’s chief, Guy Fauré.

In response to hearing that Mr. Fauré had “confidential information” to share, according to the S.E.C., Mr. Cuban replied, “Um hum, go ahead.” And at the end of the call, Mr. Cuban expressed frustration that “I can’t sell” the existing shares because he now had access to inside information.

And yet, Ms. Folena said, Mr. Cuban traded anyway, just hours before the information was made public. That move, she said, meant that Mr. Cuban avoided $750,000 in losses.

Likening it to “having the other team’s playbook,” Ms. Folena set up what is likely to be the S.E.C.’s trial strategy. The agency, it appeared, will portray Mr. Cuban as an insider who believed he deserved special status that the average investor lacked.

“The S.E.C. will show Mark Cuban had information the public did not â€" information he agreed to keep confidential.”

Striking that populist tone could score points with the jury of three men and seven women, whose members include a high school sex education teacher and a woman who described herself as “the C.E.O.” of her household.

Yet Mr. Cuban, a 55-year-old reality TV star best known for his courtside antics and outbursts at Mavericks games, is well liked in Dallas.

Thomas M. Melsheimer, one of Mr. Cuban’s lawyers, assured the jury that there were two sides to the case. In the defense’s opening statement, Mr. Melsheimer said he would tell a “very, very different story than what the government told you.”

To combat the S.E.C.’s portrayal of Mr. Cuban, Mr. Melsheimer highlighted his client’s more virtuous attributes. For one, Mr. Cuban was playing in a charity golf tournament when he received an e-mail from Mr. Fauré and called him back to discuss the private offering. Mr. Cuban, his lawyer added, voluntarily provided trading records and e-mails to anyone who asked, including the S.E.C.

“Fraud required deception and trickery,” said Mr. Melsheimer, who went on to invoke a biblical passage saying, “The wicked flee when no man pursues him, but the righteous are as bold as lions.”

Mr. Melsheimer also took aim at the heart of the S.E.C.’s case.

“No one told” Mr. Cuban “to hold the information as confidential,” Mr. Melsheimer said. He added that “Mr. Fauré doesn’t remember any of the exact words from Mark Cuban.”

There is no recording of Mr. Fauré’s call with Mr. Cuban, and Mr. Cuban does not recall the nine-year-old conversation. As such, the S.E.C.’s case hinges heavily on Mr. Fauré’s testimony, which Mr. Cuban’s lawyers dispute.

In a show of confidence to the jury, Mr. Melsheimer added: “I hope the government calls him. If they don’t, we will.”