The Work

October 25, 2010 6:07 PM

Representing Mavericks's Cuban, Dewey Gets Creative with SEC

Posted by Tom Huddleston Jr.

After learning last month that his legal battle with the Securities and Exchange Commission has been reinstated, Dallas Mavericks's owner Mark Cuban is stepping up efforts to expedite the completion of a Freedom of Information Act (FOIA) request he submitted two years ago to obtain copies of government files that his lawyers view as relevant to the case.

Indeed, Cuban is now offering to foot the agency's bill for speeding up the process of releasing the documents in question, according to one of Cuban's lawyers, Dewey & LeBoeuf partner Stephen Best.

The files that Cuban and his lawyer seek copies of are connected to the SEC's closed insider trading investigation into alleged violations of securities laws by Internet search company

The SEC, Best says, closed that investigation just before bringing an insider trading case against Cuban in 2008. The SEC suit against Cuban alleged that the billionaire NBA owner dumped his shares in 2004 after company executives informed him of a planned private offering, saving himself nearly $750,000 in the process.

The delay in turning over the requested documents stems from just how voluminous they are: Best says that the SEC told Cuban last year that reviewing the files at issue could take agency lawyers up to three years. According to this Bloomberg article, SEC lawyers have said in court that even if one attorney did nothing else, it would take him or her more than eight months to plow through the files. To Cuban's legal team, that means Cuban might not get his hands on the documents until at least the middle of next year--and perhaps not until the spring of 2012.

The SEC declined to comment for this article.

At a hearing in Washington on Friday, Bloomberg notes, Best told U.S. district court judge Reggie Walton that Cuban's legal team wants to offer the government financial assistance in order to pay the extra contracted lawyers needed to complete the document review more quickly.

Best took issue with the Bloomberg article, and one in The New York Times, which he said refer to the documents in question as being a part of the SEC's insider trading case against Cuban. While these documents relate to that ongoing suit, Best tells The Am Law Daily, Cuban's financial offer to the government is intended to expedite his FOIA request--and not to fund the government's case against him.

"The press doesn't understand the difference between the FOIA case and the insider trading case," Best said. "There is a relationship, but it's not that Cuban is willing to fund the SEC's litigation against him."

As for the offer itself, Best argues that it addresses a concern that the SEC itself raised. "The only argument the SEC made as to why they had not produced the documents to date is lack of resources..." Best says. "Mark and I thought that this was a creative way of addressing their singular reason for not producing. And, it's creative not only in the sense of saving taxpayer money, but not prejudicing anyone."

Best expressed concern with the idea that a request to the government for information could take up to three years, and claims that the SEC has contract attorneys on staff who could review the documents during extended hours. In spite of that, he says, the SEC has acted as though money would need to be put toward new hires in order to complete Cuban's request.

"They have the resources," Best says. "They just choose not to allocate them."

He also countered the SEC's suggestion that Cuban is using his wealth to gain an unfair advantage in the FOIA waiting game, pointing out that his team's plan calls for the agency's contract attorneys to review the documents during extended, or overtime, hours. (Bloomberg notes that SEC attorney Melinda Hardy said the agency is worried about wealthy individuals attempting to cut "to the front of the line.") "The point of this is that Mark is not buying his way to the top--he's taking himself out of the line," Best said. 

In September, a ruling by the U.S. Court of Appeals for the Fifth Circuit overturned a lower court decision that said Cuban did not violate any laws by selling his 6.3 percent stake in the Internet company. Best has been a part of the Dewey team representing Cuban in the insider trading lawsuit, along with partners Ralph Ferrara, Lyle Roberts, Christopher Clark, and Hank Asbill.

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