NBA Capsules: Mark Cuban's battle with SEC heating up

DALLAS - The Dallas Mavericks are out of the NBA playoffs, and the spotlight is now following the team's controversial owner, Mark Cuban, to a different venue - federal court.

The insider trading suit filed against Cuban by the U.S. Securities and Exchange Commission last year is scheduled to receive its first hearing Tuesday when attorneys present oral arguments on a motion by the billionaire owner to have the case dismissed.

The hearing will provide yet another window to a case that has captured the attention of the country's legal minds, some of whom believe it represents an unprecedented step by the SEC.

"The basis on which they're going after Cuban hasn't been tried before," said Peter Henning, a law professor at Wayne State University in Detroit who formerly worked as an attorney in the SEC's enforcement division. "Whether the SEC is going to be able to stretch (its authority) that far certainly remains to be seen."

The SEC alleges that Cuban engaged in insider trading when he sold his shares in a Canadian Internet search engine company, Mamma.com Inc., after receiving confidential information that the company planned to sell additional shares through a private offering in 2004. Cuban was able to avoid more than $750,000 in losses by selling his shares, according to the SEC.

The government's case is based on the contention that, by violating an oral agreement to keep the sensitive information confidential, Cuban committed insider trading.

Cuban and his legal team, while not admitting that the facts detailed in the suit are true, say the government's premise is wrong. They say Cuban, whose shares represented a 6.3 percent stake in Mamma.com, was never an "insider" because he didn't have a fiduciary or similar duty in his relationship with the company.

Cuban's motion to have the case dismissed has sparked a series of pleadings and briefs in which he has attacked the government's position and the government has pushed back with equally sharp elbows.

The SEC argues that a confidential agreement is sufficient to establish a fiduciary relationship and derides Cuban's attempt to say it isn't so.

"Cuban's argument that a person can promise confidentiality and then deliberately and furtively break that promise by trading on the confidential information is shameless," the SEC stated in a memo opposing his motion to dismiss. "Cuban accepted a duty of trust and confidence to the source of the information and was therefore legally obligated to abstain from trading or first disclose his plan to trade."

Five respected law professors have filed a brief in support of Cuban's position. The professors - Alan Bromberg of Southern Methodist University in Dallas, Stephen Bainbridge of UCLA, Allen Ferrell of Harvard, Todd Henderson of the University of Chicago and Jonathan Macey of Yale - weren't compensated for signing off on the brief, according to the document.

In an interview with The Associated Press, Bromberg said he researched the case after being contacted by Cuban's attorney, Ralph Ferrara, and came to the conclusion that the SEC has gone too far.

"It's like if somebody from company X called you and mentioned there's about to be an acquisition at a very attractive price but asked you not to tell anybody," Bromberg said. "You might say, ‘Well, sure, I never spill information I get from prospects or contacts,' or you might say, just as a courtesy, ‘I'll keep this information confidential.' Does that make you an insider? We don't think so."

Thomas Lee Hazen, a law professor at the University of North Carolina who has written extensively on securities law, said he believes the SEC is on solid ground.

"What you've got is a rule that clearly covers people who are under a duty of confidentiality," Hazen said. "It would seem to me that a contractual duty could easily be enough (to charge someone with insider trading)."

Cuban did not respond to an e-mail from the AP seeking comment. Ferrara, his attorney, declined comment, saying he did not feel comfortable discussing the issues publicly before they are argued in court.

SEC spokesman John Nester said the agency would have nothing to say beyond its court filings.

No matter where legal experts stand, they agree on one thing: If Cuban doesn't prevail, Tuesday's hearing could be the first chapter in a long and contentious case.

"Frankly, the district court is probably just a way station to the Fifth Circuit or even the Supreme Court," Henning said. "Mark Cuban has some pretty deep pockets."

Nuggets aim to get back to basics against Lakers

DENVER - The Denver Nuggets don't just need work on their inbounds play. If they're to bounce back from a second last-minute loss to the Lakers they'll also have to play to the rim Monday night and not the crowd as they did in Game 3.

The Nuggets didn't spend their Sunday lamenting Trevor Ariza's deja vu steal in the final minute to help the Lakers snare a 2-1 lead in the Western Conference finals.

Instead, they talked about how they tried too hard to rile up their crowd, an ill-suited strategy that resulted in them missing 22 of 27 shots from outside the arc and shooting a playoff-low 39 percent while losing at home for the first time in 75 days.

The Nuggets' three best 3-point shooters were all off the mark: Carmelo Anthony was 1-for-7, Chauncey Billups 2-for-7, J.R. Smith 2-for-10.

Kenyon Martin said he couldn't believe the Nuggets fired up that many 3-pointers, "but we were trying to put them away."

"We'd go up seven, eight points and trying to get the building to erupt," Martin said. "We've done that so much during the season and throughout the playoffs. So, we figured that's the way it was going to be. And it's not always going to be that way. You've got to grind it out sometimes, take the tough two or get to the line and score points that way."

Billups agreed the Nuggets "shot some bad 3-point shots at bad points of the game, just taking chances, trying to hit the dagger," and vowed that would change for Game 4 Monday night.

In their half-dozen blowouts at the Pepsi Center in these playoffs, the Nuggets had turned their crowd into a major factor by using their transition game, pull-up 3s, kick-outs and rim-rattling dunks to turn tight games into runaways and their arena into a jet engine.

Against Los Angeles, however, the 3-pointers rimmed out all night, allowing the Lakers to stick around long enough for Kobe Bryant to win it for them in the fourth quarter with a little help from Ariza, who also stole the Nuggets' inbounds pass in the final minute to seal Game 1.

"I think we got caught up in the emotion of the moment of a great crowd, a great challenge," Nuggets coach George Karl said. "I think we tried to hit too many home runs rather than just take a single here, a double here and win the game that way. We tried to hit too many bombs.

"We've got to challenge the Lakers to play defense on every possession. I think we took too many shots where they didn't have to play defense."

The Nuggets were simply too excited about playing in front of their boisterous crowd for the first time since eliminating the Mavericks 10 days earlier, and that resulted into too many bricks.

"Being home and just knowing how great this crowd is when we make 3s, when we make dunks, I think we may have put too much into that and wanted to feed off of that too much instead of playing a little smarter," Billups said.

The Nuggets had hoped playing at the Pepsi Center would give them some leeway to atone for mistakes, "but we can't bank on that," Billups said. "We've got to play the right way, like we've been playing the entire playoffs."

Which means being more patient, getting to the basket and attacking the rim.

The Nuggets had come to expect big games from Anthony, who had averaged 35 points in his previous five games, but he had an off night, shooting 4-for-13 for 21 points, just three after halftime.

"It was just one of them nights that the shots didn't go down," Anthony said.

For anyone, it seemed, except the guys who aren't paid for their points.

Denver defensive specialists Dahntay Jones and Chris "Birdman" Andersen shot a combined 10-for-15, which means their teammates were 23-for-69, or 33 percent.

The Lakers have their own issues, including Ariza's sore hip and groin and Bryant's banged-up body. And they got off to a slow start Saturday night. They know if not for the Nuggets' bad shot selection, they could very well be the ones facing a 2-1 hole.

"We've got to come out with more focus, more energy and really just execute a lot better in the defensive end of the floor," said Bryant, who characterized the team mood as "still a little edgy, a little upset."

Bryant needed an IV after the game Saturday night and said that was the most exhausted he'd ever been after a playoff game.

"For two, three years now I've been playing nonstop," Bryant said. "Then, the physical series we had against Houston and these guys grabbing and holding more than the Houston series. It's been a really physical series. They're making me work for everything, so it's a combination of all that."

Still, Bryant scored 41 points, including 13 in the fourth quarter.

Exhaustion?

"I couldn't tell," Anthony said. "But that says a lot about the way we're playing, how the series is going, it's a tough series. Both teams are battling, competing.

"We're expecting a long, exhausting series."

To get that, the Nuggets will have to fix their inbounds play and take better shots, two things that would really give their fans reason to cheer.

-- Arnie Stapleton

Cavs sign ownership deal with China group

ORLANDO, Fla. - The Cleveland Cavaliers have signed an agreement with an investment group from China to become minority owners of the NBA franchise and its arena, a partnership that could impact superstar LeBron James' future with the team.

The Asian conglomerate, which includes JianHua Huang, a Chinese businessman who has brokered sponsorship deals with the New York Yankees and other sports franchises in the U.S., could acquire up to 15 percent of Cavaliers Operating Company, the entity that owns the team and operates Quicken Loans Arena.

The deal, completed by the sides in recent days, must be approved by the league's board of governors.

Team president Len Komoroski said Sunday the group approached Cavs principal owner Dan Gilbert about the partnership and called the business venture "an exciting new opportunity."

Gilbert's role in overseeing the organization and 20,000-seat arena will not be affected by the new partners.

Citing multiple unnamed sources, the Cleveland Plain Dealer first reported the sides had a tentative deal in place. But in recent days, paperwork was completed between Gilbert and the consortium. It will now be sent to the league office for approval.

With an eye on spreading the game on a global scale, the NBA has been quietly pushing for an international group to become involved in ownership on a minority level. And with a huge fan base already in China - mainly because of Houston All-Star Yao Ming - the league has entered into several ventures with the nation to develop players and build arenas to NBA specifications.

Huang and others in the group attended Games 1 and 2 of the Eastern Conference finals in Cleveland. On Friday, they sat courtside and watched James hit a game-winning 3-pointer in the final second to give the Cavaliers a 96-95 win and even the best-of-seven series which resumed Sunday night.

If approved, the deal would provide marketing opportunities for the Cavaliers and James, who is eligible to become a free agent in the summer of 2010. The 24-year-old MVP, who is already among the league's most popular players in Asia, has stated he wants to become the first billionaire athlete. His brand overseas could be enhanced by playing for a team with Chinese business partners.

There has been ongoing speculation that James will leave Cleveland to play in a larger market like New York or Los Angeles because of the vast business opportunities. But James - and his corporate sponsors like Nike - have broader goals and may be able to attain them by tapping into China's colossal consumer marketplace without him ever leaving Cleveland.

James has never given any indication he wants to leave the Cavaliers, who drafted the Akron, Ohio, native with the No. 1 overall pick in 2003. He won a gold medal with the U.S. team last summer at the Beijing Games and has made four trips to China, including one with the Cavs during the preseason two years ago.

"It's a big market," James said before Game 3. "They love the game of basketball. I've been over there the last four or five summers. It should be good. It should be fun."

Gilbert has been approached by outside investors in the past, but his original business group has mostly remained intact since he bought the Cavaliers and the rights to operate their arena for $375 million from former majority owner Gordon Gund in 2004.

Gilbert purchased the team with several other investors, including longtime business partner David Katzman, R&B superstar Usher and others. Gund maintained partial ownership.

However, in the past two years, Katzman has decided to focus on other business interests and the Chinese group would essentially take over his percentage of the Cavs.

-- Tom Withers