On July 17, 2009, a federal judge in the United States District Court for the Northern District of Texas dismissed the Securities and Exchange Commission’s (SEC) insider–trading case against Dallas Mavericks owner Mark Cuban for failure to state a claim on which relief could be granted. The SEC’s claim was based on the misappropriation theory of insider trading, which provides that a person commits fraud in connection with a securities transaction, and thereby violates Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b–5 issued thereunder, when he misappropriates confidential information for securities trading purposes in breach of a duty owed to the source of the information.1

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