Judge Allows Probe of SEC Over Legal Fees for Dropped Case

A U.S. judge has ruled that Mark Cuban, the billionaire Dallas Mavericks basketball team owner, can probe the U.S. Securities and Exchange Commission as part of his effort to get the agency to pay his legal fees after its insider-trading case against him was thrown out.

Judge Sidney Fitzwater, of the U.S. district court in Dallas, ruled on Dec. 4 that Cuban could conduct “discovery” and seek phone records, e-mails and other communications from the SEC related to its case against him.

Cuban has claimed that the SEC did not have a “good faith” basis for its lawsuit against him, lacked sufficient facts to bring the case, and that there was misconduct in the agency’s investigation. Cuban would have to prove that were true in order to get the court to consider forcing the SEC to pay his legal fees in the case.

In the civil suit, the SEC claimed Cuban acted on nonpublic information when he sold his stake in Internet search engine company Mamma.com to avoid more than 750,000 in losses. Judge Fitzwater tossed out that case in July, saying Cuban was not legally an insider.

SEC spokesman John Heine declined to comment on the case.

The case is SEC vs. Mark Cuban, U.S. District Court, Northern District of Texas, No. 08-2050.