HDNet owner Mark Cuban was charged by the Securities and Exchange Commission for insider trading for a deal linking back to 2004.
From the Wall Street Journal:
The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.
In a PIPE transaction new shares are issued at a discount to the current trading price. An announcement of a PIPE transaction is often followed by a drop in the stock price as shareholders anticipate their stake will be diluted.
It’s unknown at this time what fallout Cuban will face from the SEC charges, or if will have any effect at all with Cuban’s other entities including the popular cable station, HDNet.