Texas Business Report: Cuban’s Insider Trading Crisis
Dallas Mavericks owner and Shark Tank panelist Mark Cuban is back in court this week to defend himself against a federal insider-trading lawsuit that has spanned nearly a decade. The Securities and Exchange Commission claims Cuban “broke a promise of confidentiality and traded on private information that gave him an advantage over other investors” when he sold his stock in the Internet search company Mamma.com in 2004, the Fort Worth Star-Telegram reports.
At the center of the investigation is a phone call between Cuban and Mamma’s CEO, who mentioned an upcoming private offering that was likely to dilute the company’s stock value, prompting Cuban to dump his shares. The SEC claims both parties had agreed to keep the conversation confidential, which would have barred the Mavs owner from unloading his stock until the news went public. Cuban, who was the company’s largest shareholder at the time, claims he never agreed to confidentiality.
The Bottom Line: The SEC hopes to reclaim about $750,000 in losses that Cuban dodged by bailing out early, plus an additional fine, according to the Star-Telegram. There are no criminal charges involved in the trial, which will resume on Monday.
Another week, another new development in the saga of the American Airlines / US Airways merger. Texas Attorney General Greg Abbott is behind the latest twist, announcing this week that he will support the deal on the condition that the airlines “vow to keep the combined carrier’s headquarters in Texas and maintain a hub at Dallas-Fort Worth International Airport,” Businessweek reports. He also urged them to continue flights to 22 Texas cities that would otherwise be underserved.
This is a reversal of a stance Abbott took just six weeks ago, when he sided with the U.S. Department of Justice and several other states in an antitrust lawsuit against the two carriers. The Republican gubernatorial candidate says he decided to settle Texas’ involvement in the case because the airlines agreed to make a “legally enforceable promise” in writing that they would adhere to his terms.
The Bottom Line: Some have speculated that Abbott’s decision may have been motivated by the emergence of a prominent challenger in the looming governor’s race, Democratic State Senator Wendy Davis, who announced her candidacy this week.
While the attorney general has taken some heat from business groups “for siding against a major Texas employer,” Davis—whose district is within the DFW Metroplex—supports the merger and has called on the federal government to drop the suit, according to Businessweek.
The Container Store filed for an initial public offering on Monday and is looking to raise about $200 million in capital, the Dallas Morning News reports. The Coppell-based storage products retailer has been working with underwriters including J.P. Morgan Chase and several other institutions for several months in preparation for the IPO. The company plans to list its shares on the New York Stock Exchange under the symbol TCS, but it has yet to announce how many it will offer or estimate a price range, according to the Morning News.
The Bottom Line: The filing appears to be well timed, as the Container Store is coming off a strong year in terms of sales, which increased 11.5 percent in the year that ended in March, according to Reuters. However, some analysts are speculating that the company’s real motive may be to broadcast “an advertisement that it’s for sale,” the Dallas Business Journal reports.
Winners of the Week: Austin Internet Geeks
AT&T confirmed this week that Austin will be the first city in the U.S. to receive its new ultrafast Internet network, with service expected to begin sometime in mid-2014. The company’s GigaPower service will square off against Google’s high-speed Fiber network, which should arrive in the city at around the same time, the Wall Street Journal reports. The fiber-optic connections will transmit data at speeds up to a gigabit per second, which is roughly 100 times faster than average networks—AT&T’s fastest connection in Austin currently downloads just 45 megabits per second, according to the Austin Business Journal.
Losers of the Week: NASA Employees
More than 3,000 employees of NASA’s Johnson Space Center in Houston are on mandatory unpaid leave this week as a result of the federal government shutdown, KPRC-Houston reports. The only personnel still on the job at the center are about 100 scientists who work with the astronauts aboard the International Space Station. Proportionally, NASA is among the government agencies hit hardest by the impasse in Congress, which has furloughed 97 percent of its 18,134 workers nationwide, according to the New York Times.
(AP Photo | LM Otero)