You'd think that Floyd Norris would know something about securities regulation, since he is the chief financial correspondent for the NY Times and the International Herald Tribune. If his story/blog port today on the Mark Cuban SEC case is anything to go by, however, the guy's a typical MSM idiot. Let's take a look:
Did Mark Cuban, the Internet entrepreneur turned owner of the Dallas Mavericks basketball team, and would-be buyer of the Chicago Cubs, violate insider trading laws in a particularly egregious fashion?
Or is he the victim of a political hit job because he helped finance a movie that was scathingly critical of President Bush?
If Norris knew anything about the SEC, he'd know that the agency has a very clean reputation when it comes to politics. Indeed, the only government agency or official the SEC would be likely to use enforcement activities to benefit is the SEC itself. Back when John Shad was SEC chairman under President Reagan, he adopted a so-called big bang theory of insider trading enforcement. Shad was busy deregulating the securities industry and he wanted to distract Congress. So he launched a series of high profile insider trading cases that made Congress happy to give the SEC bigger budgets and leave Shad to his deregulatory devices. If you want a conspiracy theory, try assuming that the SEC went after Cuban to distract attention from the SEC's misadventures in connection with the financial crisis.
Personally, I don't buy that theory either, but then I'm not a conspiracy theory nut.
Back to Norris:
A person close to Mr. Cuban provided me with a copy of an e-mail message said to have been sent by Jeffrey Norris, an S.E.C. lawyer in the Fort Worth regional office (and no known relation to me.) This e-mail message seems to have been sent after an exchange in which Mr. Norris complained that Mr. Cuban had financed a movie called ?Loose Change? that discusses the president?s actions relating to Sept. 11.
Even if some nut job in the SEC Fort Worth office sent such an email, this sort of enforcement proceeding would have been handled out of the DC office. So it's a red herring. But Norris is happy to pass it along at the behest of a person "close" to Cuban.
Mr. Cuban made a substantial profit from a quick trade in an Internet company that, oh-so-briefly, was a hot stock in 2004. It is not clear from public records just how much money he made, but even if the S.E.C. succeeds in its efforts to take about $750,000 in profits from him, he will still be one of the few public shareholders to rank as having made a lot of money from the company.
Did Norris even read the complaint? The complaint does not allege that Cuban made a profit, it alleges that he avoided a loss. The whole point is that Cuban was "one of the few public shareholders" who avoided a loss and he did so only because he had access to inside information.
As it is, there appears to be no question about when Mr. Cuban sold the stock. The S.E.C. cites phone company records and company memos about the timing and content of the call. If those memos were accurate, it appears that Mr. Cuban knew he had a duty not to sell until the information about the offering was made public.
But even if all that is true, the Norris e-mail, sent from an S.E.C. e-mail address, indicates the commission has a lawyer with, at best, very poor judgment.
An incompetent government employee. There's a shocker. Real news story. And, however bad SEC lawyer Norris' judgment may have been, Cuban's was worse. According to the complaint, he knew he couldn't sell--indeed, he said as much to mamma.com's CEO--and still sold because he had a non atypical temper tantrum.
There's been a lot of stupidity on all sides in this case. Sad to see reporter Norris contributing to it.
