The NASPP Blog

I had a different blog topic in mind for today, but as I was literally putting this to bed, Congress voted to end the 16 day government shutdown and raise the debt ceiling – at least temporarily. We promised updates as things changed, so I’ll take this opportunity to assess the situation. Separately, there was a verdict yesterday in the high-profile insider trading civil case brought against billionaire celebrity Mark Cuban that will round out today’s news.

Government Back Online

As I write this, the word on the street is that the government will reopen “immediately”. I wasn’t quite sure what that meant, but based on news reports, it appears that “immediately” means today or at some point shortly thereafter. Since Congress voted late at night, I’m wondering if word will really get out that government workers need to return to work first thing today. But things should be back to the normal routine soon. I’ve heard that the National Zoo will be one of the last places to reopen, and they are presently saying Friday, October 18th will be the day. I guess we’ll know for sure that the government has reopened on a widespread basis when the panda cam at the zoo (which went dark in the shutdown – depriving many of us fans the ability to tune into the latest panda baby) is back on.

Areas where we’ll see some changes are:

• The IRS should reopen and resume accessibility for taxpayer questions. Other pending activities, such as audits and refunds should move forward imminently as well.
• The SEC’s filing systems were never shut down, so everything related to company filings should still be business as usual.
• The poison ivy eating goats furloughed in New Jersey should be back to work soon. If you’re wondering what I’m talking about, see my blog on the Government Shutdown: Part 2 from a couple of weeks ago.

An Insider Trading Verdict

Billionaire Mark Cuban (owner of the Dallas Mavericks basketball team, star of TV’s Shark Tank) was found not guilty of insider trading by a jury yesterday. The SEC first initiated action against Cuban back in 2008, filing a civil suit alleging that he dumped his 6.3% stake in Mamma.com ahead of negative news, based on insider information. The initial lawsuit was dismissed by a judge, but the SEC persisted, and the case was revived on appeal in 2009. Cuban refused to settle and, after a tooth and nail 5 year fight in which Cuban refused to settle, the case went to trial, culminating with yesterday’s verdict. This case was part of a long string of cases brought by the SEC in recent years. The SEC has quite a track record of success in these cases. According to the SEC’s web site (yes, I obtained this information from their web site even in spite of the government shutdown), 161 entities and individuals have been charged with insider trading as of September 1, 2013, resulting in more than $1.53 billion in penalties. The Cuban verdict was one of few losses for the government in this long string of insider trading cases (though the SEC has lost some other high profile cases as well), which is part of what makes it newsworthy. Some prominent newspapers are already asking the question of whether this verdict will undermine the SEC’s movement to hold more individuals accountable for insider trading. It seems the SEC is not giving up, though. In a statement, the SEC spokesperson said that “while the verdict in this particular case is not the one we sought, it will not deter us from bringing and trying cases where we believe defendants have violated the federal securities laws.” All indications are that this long insider trading crackdown is yet to be over.

One message to employees continues to be that SEC action is not limited to larger cases like Cuban’s. In a recent blog, I highlighted another case that amounted to a mere profit of $7,900 for one guilty party, and consequences for an unintentional tipper that didn’t profit at all. While some cases get a lot of publicity, like Cuban’s case, it’s important to remember that no trade is too small or person too insignificant to escape SEC scrutiny.

-Jennifer