Updated, 8:42 p.m. | The government mocked Mark Cuban as a winner in “his mind,” claiming that the billionaire owner of the Dallas Mavericks basketball team possessed a “competitive edge” that drove him to insider trading.
But a jury cleared him of wrongdoing on Wednesday, making Mr. Cuban a winner in the civil case and delivering a blow to the federal agency that he battled tooth and nail for five years.
The agency, the Securities and Exchange Commission, was hoping to build on the momentum it gained from the recent trial win against Fabrice Tourre, a former Goldman Sachs trader at the center of a failed mortgage deal.
Now the loss in the Cuban case could reignite concerns about the agency’s struggles in the courtroom, where some crucial cases from the financial crisis crumbled. The loss on Wednesday might also undercut the S.E.C.’s campaign to hold more individuals accountable at trial, a policy championed by its new chairwoman, Mary Jo White.
The S.E.C., however, played down the significance of the verdict.
“We respect the jury’s decision,” John Nester, the agency’s spokesman, said in a statement. “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.”
The verdict stands in stark contrast to past successes in insider trading cases, which traditionally are among the safest bets for the government. Federal prosecutors in Manhattan are undefeated in their recent insider trading trials.
But after less than four hours of deliberation, a nine-person jury concluded that Mr. Cuban was not liable under federal securities laws, concluding that he did not commit insider trading when he dumped his stake in an Internet company. The verdict capped a more than two-week civil trial for one of the few celebrities to land on the S.E.C.’s radar. Mr. Cuban, 55 and also a reality TV personality, was facing a roughly $2 million fine, short of what he paid for his lawyers.
With a net worth pegged at $2.5 billion, and a track record for paying more than $1 million in fines for his courtside antics and tirades against N.B.A. referees, Mr. Cuban’s battle was not about the money. Instead, he fought the case to clear his name and humble the agency that sued him.
“It’s personal,” Mr. Cuban declared at a heated news conference outside the courthouse in Dallas. “When you take all these years of my life and try to make a point, it’s personal,” he said, adding, “It’s just wrong the way this went down.”
In a statement, Mr. Cuban said that the verdict raised broader concerns about the S.E.C.’s tactics. The case, he said, “shows that the S.E.C.’s process is broken.”
“I hope this result shines a light on the S.E.C. abuses that I have witnessed,” he added, “and causes the agency to change the way they do business.”
The agency is unlikely to change, however.
In a recent speech, Ms. White argued that “a strong enforcement regime is only effective if we have the ability to back it up in court.” The agency has won about 80 percent of its trials in recent years, fulfilling what Ms. White called a “well-established record of winning.”
Still the S.E.C. settles most cases before trial. And a loss in a prominent case like Mr. Cuban’s could undermine its aggressive strategy. Over two years of investigating and five years of litigating, the expenses racked up. The agency spent about $180,000 on an expert witness it never used, Mr. Cuban’s lawyers said, raising questions about whether such cases drain the agency’s precious resources.
“It’s particularly important for the S.E.C. to win the high-profile cases,” said Stephen J. Crimmins, a partner at law firm K&L Gates and former deputy chief litigation counsel in the S.E.C. enforcement division. “With a loss, the S.E.C. runs the risk of demoralizing its staff and hurting the credibility the agency brings to the table in negotiating settlements.”
There were early indications that the Cuban case might not pan out. The judge assigned to the case, Sidney A. Fitzwater, dismissed it in 2009. Although the United States Court of Appeals for the Fifth Circuit reversed the judge’s dismissal, Judge Fitzwater continued to strike a skeptical tone, saying his decision to allow the case to proceed to trial was “in some respects a close one.”
Mr. Cuban also carried a wild card: a hometown jury. Mr. Cuban is generally well liked in Dallas, where his Mavericks were champions of the National Basketball Association in 2011.
The S.E.C., though, sought to portray him as a cheater.
The agency’s case stems from Mr. Cuban’s decision in June 2004 to sell his 6.3 percent stake in the search engine Mamma.com. He did so after learning from Mamma.com’s chief executive that the company was planning a private offering of its stock — a deal likely to hurt the stock price and dilute the holdings of existing shareholders like Mr. Cuban.
The S.E.C. lawyer leading the case, Jan M. Folena, argued that Mr. Cuban agreed to keep the information confidential in a call with the firm’s chief, Guy Fauré.
In response to hearing that Mr. Fauré had “confidential information” to share, according to the S.E.C., Mr. Cuban replied, “Um hum, go ahead.” And at the end of the call, Mr. Cuban expressed frustration that “I can’t sell” the existing shares because he now had access to inside information.
And yet, Ms. Folena said, Mr. Cuban traded anyway, just hours before the information was made public. That move, she said, meant that Mr. Cuban avoided $750,000 in losses.
Mr. Cuban’s lawyers had little trouble casting doubt on Mr. Fauré. There was no recording of Mr. Fauré’s call with Mr. Cuban. And Mr. Cuban, who maintained his cool in two days on the witness stand, did not recall the nine-year-old conversation.
In closing arguments on Tuesday, Mr. Cuban’s lawyers took direct aim at Mr. Fauré. One of the lawyers, Thomas M. Melsheimer, argued that Ms. Folena can repeat Mr. Fauré’s testimony “until the cows come home,” but, he added, “that doesn’t make it true.”
Mr. Melsheimer also noted to the jury that, despite being the S.E.C.’s star witness, Mr. Fauré declined to appear in person. Instead, he appeared via a taped video.
Mr. Fauré raised further suspicions with Mr. Cuban’s lawyers when he changed his story in a way that benefited the S.E.C.’s case. The change came at a curious time — about two weeks after learning that the agency dropped an unrelated investigation into Mamma.com.
“This was a terrible case from the outset,” said another one of Mr. Cuban’s lawyers, Christopher J. Clark of Latham & Watkins in New York. Mr. Cuban was also represented by Stephen Best of Brown Rudnick, in Washington, as well as Lyle Roberts and George Anhang of Cooley LLP in Washington, among others.
Emerging from the courthouse on Wednesday, Mr. Cuban returned to a central theme in the government’s case: that he had a win-at-all-costs mentality.
“There’s no point in time when I sat there listening to it and thought, ‘Winning will feel good.’ ”