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Memorandum of Mark Cuban in S.E.C. Case

Memorandum of Mark Cuban in S.E.C. Case

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Published by DealBook
From DealBook: Memorandum of support by Mark Cuban in his insider trading case brought by the Securities and Exchange Commission.
From DealBook: Memorandum of support by Mark Cuban in his insider trading case brought by the Securities and Exchange Commission.

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Published by: DealBook on Sep 23, 2009
Copyright:Public Domain

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10/15/2012

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IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF TEXASDALLAS DIVISION
SECURITIES AND EXCHANGE )COMMISSION, ))Plaintiff, ))v. )
Civil Action No. 3:08-cv-02050 (SAF)
)MARK CUBAN,
 
))Defendant. ) ____________________________________)
M
EMORANDUM OF
L
AW OF
M
ARK 
C
UBAN
 I
N
S
UPPORT OF
M
OTION FOR 
A
TTORNEYS
 
F
EES AND
E
XPENSES
 
Case 3:08-cv-02050-D Document 42 Filed 08/28/2009 Page 1 of 28
 
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TABLE OF CONTENTSPage
INTRODUCTION...........................................................................................................................1RELEVANT FACTS.......................................................................................................................3A. Testimony Obtained by SEC Showed There Was No Confidentiality Agreement between Mamma.com’s CEO and Mr. Cuban.....................................................................3B. Evidence of SEC Bias..........................................................................................................5C. SEC’s Improper Use of Wells Notice Process.....................................................................6D. Investigation by Mr. Cuban’s Counsel Confirmed There Was No ConfidentialityAgreement between Mamma.com and Mr. Cuban..............................................................8(1) The Mamma.com Board did not instruct Mr. Fauré to enter into aconfidentiality agreement with Mr. Cuban..............................................................8(2) Mr. Fauré did not enter into a confidentiality agreement with Mr. Cuban..............8(3) Mr. Fauré did not tell Mr. Goldman that Mr. Cuban had entered into aconfidentiality agreement.........................................................................................9(4) Mr. Owen did not enter into a confidentiality agreement with Mr. Cuban...........10E. SEC Staff’s Inappropriate Reaction to New Wells Submission........................................11F. SEC Took Testimony of Mr. Fauré For Second Time In An Attempt To ChangeHis Prior Statements..........................................................................................................13G. SEC’s Unfounded Complaint............................................................................................16H. OIG Investigation of SEC Staff’s Misconduct..................................................................16ARGUMENT.................................................................................................................................17A. Court Can Award Attorneys’ Fees and Expenses under Either Inherent Power toSanction or 28 U.S.C. § 2412(b)........................................................................................17B. SEC Acted In Bad Faith In Bringing Its Case Against Mr. Cuban....................................19C. Attorneys’ Fees and Out-of-Pocket Litigation Expenses Are an AppropriateSanction in this Case..........................................................................................................21CONCLUSION..............................................................................................................................22
Case 3:08-cv-02050-D Document 42 Filed 08/28/2009 Page 2 of 28
 
ii
 
TABLE OF AUTHORITIES
Page(s)
Cases
 
 Barton v. Drummond Co
.,636 F.2d 978 (5th Cir. 1981)....................................................................................................17
 Bowden v. United States,
 106 F.3d 433 (D.C. Cir. 1997).................................................................................................20
 Bradley v. United States
,866 F.2d 120 (5th Cir. 1989)....................................................................................................18
Chambers v. Nasco
,501 U.S. 32 (1991)...................................................................................................................17
 Davis v. Veslan Enters
.,765 F.2d 494 (5th Cir. 1985)....................................................................................................21
 FDIC v. Maxxam
,523 F.3d 566 (5th Cir. 2008)........................................................................................17, 18, 19
 Interfederal Capital, Inc. v. Flagstar Bank, FSB
, No. CIV.A. 399CV2318P, 2001 WL 1645480 (N.D. Tex. Dec. 19, 2001).............................20
Merriman v. Security Ins. Co
.,100 F.3d 1187 (5th Cir. 1996)..................................................................................................21
 Nemeroff v. Abelson
,704 F.2d 652 (2d Cir. 1983).....................................................................................................18
Official Airlines Schedule Information Services, Inc. v. Eastern Air Lines, Inc.
,333 F.2d 672 (5th Cir. 1964)....................................................................................................21
 Perales v. Casillas
,950 F.2d 1066, 1071 (5th Cir. 1992)........................................................................................18
 Roadway Express, Inc. v. Piper 
,447 U.S. 752 (1980)...........................................................................................................17, 18
 Ryan v. Hatfield,
578 F.2d 275 (10th Cir. 1978)..................................................................................................18
Sanchez v. Rowe
,870 F.2d 291 (5th Cir. 1989)....................................................................................................17
SEC v. Berlacher 
, No. 07-cv-3800 (ER) (E.D. Pa. Feb. 5, 2008)..........................................................................22
Case 3:08-cv-02050-D Document 42 Filed 08/28/2009 Page 3 of 28

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