• The Fifth Circuit’s Decision in Sec v. Cuban: Lessons for Companies and Traders
  • September 24, 2010 | Authors: Bruce A. Baird; David B. Bayless; Haywood S. Gilliam; Nancy Kestenbaum; David L. Kornblau
  • Law Firms: Covington & Burling LLP - Washington Office ; Covington & Burling LLP - San Francisco Office ; Covington & Burling LLP - New York Office
  • On September 21, 2010, the U.S. Court of Appeals for the Fifth Circuit, as expected, reinstated the SEC’s insider trading case against Mark Cuban. Although the decision is written narrowly, it contains important lessons for both companies and traders: Companies who provide nonpublic information to third parties, such as potential investors, business partners, advisers, consultants, or vendors, should ensure that their confidentiality agreements expressly prohibit recipients of the information from trading on it. And traders should consult legal counsel and carefully assess all the relevant facts before trading with knowledge of nonpublic information, no matter how and from whom it was obtained.