Mark Cuban's insider trading case is dismissed

[black diamond]

My vague memory from studying for the CFA exam is that the tipper cannot unilaterally impose a duty not to act by giving unsolicited information. Something like a fiduciary relationship has to exist (except in special cases like a tender offer), and if an insider carelessly releases information where that relationship doesn't exist it can be traded on.

Otherwise a CEO could just blurt confidential information to large shareholders at key times and restrict them from selling. Assuming he has a pretext to get around Reg FD, but that is something else I only vaguely remember.

Does this sound right? It doesn't sound like there is a duty if he was just called out of the blue with an offer of stock. I agree he sounds like an a-hole but I am still curious if what he did was really illegal.

Quote from AAAintheBeltway:

This area of the law, know as tippee liability, is somewhat muddled. Other than tipping off your girlfriend however, I would have thought tipping a big holder and financier who promptly sold on the info without disclosing it, would be a pretty clear case of liability.

I would expect the SEC to appeal this case and prevail. The theory adopted by the judge here has never been the law, to my understanding.

In passing, I would point out it shows what a jerk Cuban is, if anyone needed confirmation of that. He abused his position to take advantage of other shareholders and market participants who lacked his access. Now somehow he got a judge in his hometown to say it was ok. Nothing there to applaud in my opinion.