Since defeating the SEC in court , Mark Cuban and his lawyer Lyle Roberts have publicly criticized the agency on several different grounds. They’ve raised interesting issues—but the most important thing is, they fought in court and they’re still fighting.
The SEC offered to let Cuban settle. It would have cost him $2 million, but that’s only a sixth of what he says he ultimately spent fighting the case—and he could have gone on with his life instead of worrying about a government lawsuit for five years. That would have been the easy option.
Instead, Cuban took the courageous option. He fought. And now that they’ve won, he and Roberts are continuing to fight. Cuban accused the SEC of ignoring the facts and of targeting him because he’s a big name . And Roberts published an op-ed in the Wall Street Journal arguing that the SEC is interpreting insider trading law too broadly and creating too much uncertainty as to what it prohibits.
These are complicated charges. I want to focus on just two points and how they connect.
First: according to Roberts, the SEC has been trying to expand the definition of insider trading in the cases it’s been bringing. One might try to defend the SEC on this point, noting that a lot of the shaping of law takes place through litigation, and arguing that law “found” by courts is often less arbitrary and more reasonable than bright-line rules imposed by regulators. Indeed, as Roberts notes, in this very case the court struck down an SEC regulation.
Second: It would have been cheaper and easier for Cuban to settle—and as Cuban points out , not everyone is in a position to fight. But if you can’t fight in court, or if you just don’t want to, then the government succeeds in making its interpretation of the law stick, no matter how arbitrary that interpretation is. It succeeds in punishing you even if you didn’t break the actual law. And it transforms our country, little by little, from a republic of free citizens who exercise their rights and fight for them, into a state whose subjects know only how to obey and submit.
Mark Cuban had the courage and pride to stand up for himself—and the patriotism to stand up for his country. For that, he should be honored. The applause he received from the Tonight Show audience is heartening. It shows that for all that our government tries to rule by intimidation, at least some Americans do still honor those who stand up to our government.
For further reading:
- Alexander R. Cohen, Government by Intimidation
- Alexander R. Cohen, The Morality of Insider Trading (or see video lecture )