On July 17, 2009 the United States District Court for the Northern District of Texas dismissed the insider trading complaint filed by the Securities and Exchange Commission against Dallas Mavericks' owner, Mark Cuban. The Court's reasoning provides useful guidance to companies disclosing material nonpublic information pursuant to confidentiality undertakings. Even though the decision is helpful in starting clarify the scope of liability under the misappropriation theory, it is a District Court decision at first instance and is therefore not binding on other courts. Furthermore, the SEC has the ability to file an amended complaint or appeal the decision. Therefore, recipients of material nonpublic information should continue to view the law in this area as being in a state of flux and await further clarification before drawing firm conclusions from the decision.
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