Can U.S. investors obtain justice? The discouraging answer is that if you’re a billionaire prepared to give up five years of your life waging a full-court defense, then justice might eventually prevail.
That startling conclusion emerged from what was billed as a “debate” between billionaire investor and Dallas Mavericks owner Mark Cuban and former SEC chair Chris Cox, the man who ran the SEC while Cuban was accused of insider trading, a charge of which he was cleared last year.
The encounter—the two men’s first face-to-face meeting—took place on Tuesday in Las Vegas at the MarketCounsel conference, a gathering of over 500 investment industry representatives, mostly independent financial advisors.
But there was no debate during the hour-and-a-half session, with Cox—who said he was “recused from the case for technical reasons”—admitting from the outset that the agency he once headed “absolutely has to learn from its failures.”
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Indeed, the two men painted a picture of a rogue agency rife with prosecutorial misconduct.
“The SEC is not looking for justice, it’s looking to win,” said Cuban, whose 2004 sale of Mamma.com stock aroused the suspicions of the regulator of U.S. securities markets.
When SEC investigators first asked Cuban about the transaction in 2004, he told them everything he knew, saying he had nothing to hide.
“They lost those notes in 2004,” Cuban said, and though someone else apparently engaged in illicit trading of the stock, four years later the agency filed charges against Cuban.
When the dust settled in 2013, a jury quickly concluded Cuban bore no liability. Those notes taken nine years prior “resurfaced two weeks before trial and confirmed everything I said,” Cuban bitterly remarked, recalling that he stood on the courtroom steps after his legal victory and declared: “The SEC is a joke; it’s not about justice; [its lawyers] only care about their next job.”
A somewhat subdued looking Cox added that prosecutorial misconduct is a widespread problem throughout government, citing as an “egregious” example prosecution of the late Sen. Ted Stevens.
“We’ve got to [stop] people going rogue,” said Cox, now a securities attorney in private practice.