This document
is
subject to the provisions
of
the Privacy Act
of
1974,
and
may
require redaction beforedisclosure to
third
parties.
No
redaction has been performed
by
the Office
of
Inspector General.Recipients
of
this report should
not
disseminate
or
copy it without the Inspector General's approval.
REPORT
OF
INVESTIGATION
UNITED STATES SECURITIES
AND
EXCHANGE COMMISSIONOFFICE
OF
INSPECTOR GENERALCase
No.
OIG-511Allegations
of
Enforcement Staff Misconduct
in
Insider Trading Investigation
August 22, 2011
REDACTION KEY
LE
= Law Enforcement/ Interference with Enforcement ProceedingsProtected by FOIA Exemption (b)(7)(A)
DP
= Deliberative Process PrivilegeProtected by FOIA Exemption (b)(5)
AC
= Attorney-Client PrivilegeProtected by FOIA Exemption (b)(5)
WP
= Attorney Work-Product PrivilegeProtected by FOIA Exemption (b)(5)
PII
= Personal Identifying InformationProtected by FOIA Exemptions (b)(6) & (b)(7)(C)Redactions that appear with pseudonyms (e.g., Attorney 1and Witness 1) are protected by FOIA Exemptions (b)(6) &(b)(7)(C).
This document is subject to the provisions
of
the Privacy Act
of
1974,
and
may require redactionbefore disclosure to third parties.
No
redaction has been performed by the Office
of
InspectorGeneral. Recipients
of
this
report
should not disseminate
or
copy
it
without the Inspector General'sapproval.
REPORT
OF
INVESTIGATIONCase No. OIG-511Allegations
of
Enforcement Staff Misconduct
in
Insider
Trading
InvestigationTable
of
Contents
Introduction
&
Summary
of
Allegations ............................................................................. 1The Civil Litigation .................................................................... ...................................... 3Executive Summary
of
Investigative Findings ................................................................... 5Scope
offue
OIG's
Investigation ....................................................................................... 9Applicable Policy and Regulations .......................................................................•........... 10Results
of
the Investigation ..............................................................................................
15I.
BACKGROUND FINDINGS
..................•....•.........•.........................................•....•..•....
15A.
Initiation
offue
Investigation Into
Mr.
Cuban's Sale
of
his Mamma.comStock Shares ....................................................................................................
15
B.
The HO-09900 Investigation into Mamma.com .............................................
16
C.
Early Investigative Work into Mr. Cuban's Sale
of
Mamma. com Stock .......
19
D. A Fort Worth Regional Office Trial Attorney Began an InappropriateE-Mail Exchange wifu Mr. Cuban from his SEC Computer in March 2007
. 23
1.
The March 2007 E-Mails ..........................................................................
232.
The FWRO Attorney Sent More E-Mails to Mr. Cuban
in
May
2007,Copied to Former Chairman Cox, and fuen Forwarded Them toAssociate Director Friestad ....................................................................... 24
3.
Actions Taken After fue Chairman was Copied on, and AssociateDirector Friestad was Forwarded, fue May 2007 E-Mails ....................... 26
4.
Former Chairman Cox Recused Himself from fue Commission Meetingto Decide Whether to Authorize Suit Against Mr. Cuban ........................ 30
5.
The FWRO Trial Attorney Was Disciplined for Sending InappropriateE-Mails to Mr. Cuban from his SEC Computer .......................................
31
E. The'Wells Call and Process ............................................................................ 32
1.
The Wells Notice to Mr. Cuban's Counsel ...............................................
332.
Mr. Cuban's Counsel's Request for Evidence .......................................... 34
3.
The First Wells Submission ...................................................................... 37
F.
Trial
Couns~l
Gets Appointed to Case ........................................................... 38
G.
The Pre-Wells Meeting ................................................................................... 39
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S.E.C. Inspector General's Report on the Mark Cuban Case
S.E.C. inspector general's report on the Mark Cuban insider trading case.
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