Say it ain't so, Mark Cuban.
Yesterday the Securities and Exchange Commission (SEC) charged the billionaire with insider trading. The regulatory agency claims that Cuban sold shares of mamma.com, a Canada-based Internet search company, with the advance knowledge of a yet-to-be-disclosed private equity offering of company shares.
Cuban allegedly sold his shares under the assumption that the private offering would greatly dilute his holdings. Selling as he did prevented the loss of some $750,000, the SEC claims in its charges.
He denies the charges and vows to fight.
Mamma.com changed its name to Copernic Inc. (NASDAQ: CNIC) in 2007. As a result of the highly publicized charges against Cuban, I expected to see trading volume in CNIC increase from its current average volume of 45,000 shares.
Sure enough, volume yesterday was at more than 350,000 shares. The lemmings are so predictable. They see something on the news and they place a trade.
No matter that the reasons for the company being in the news have little to do with the business, its current state or its future potential. The company is in the news because of insider trading, period.
Now, is that a reason for a stock to go up in value?
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