The Young Texas Lawyer

U.S. District Judge Sidney Fitzwater in Dallas said in a Dec. 4 order that billionaire Dallas Mavericks owner Mark Cuban may seek documents and other information from the Securities and Exchange Commission in order to force the agency to pay his attorney’s fees after their insider-trading lawsuit was dismissed.

Cuban can conduct discovery over the legal-fees question to see if he can support his contentions that the SEC engaged in misconduct in investigating him and lacked a good- faith basis to sue him. “To the extent that he views it as the agency having tweaked him, he wants to tweak back,” Jacob Frenkel, a former SEC lawyer now in private practice, told Bloomberg.com of Cuban’s fee quest. “Is this likely to meet with success? No. Is that likely to stop him? No. Many who are accused by the SEC are pleased to take a dismissal and ride off into the sunset.”

Fitzwater dismissed the initial suit against Cuban on July 17, ruling the commission failed to allege he agreed to refrain from trading based on information about a private stock placement. The judge didn’t rule on the merits of the accusations by the SEC, which has appealed the dismissal.

“We’re very grateful that the judge has given us the opportunity to establish the facts that demonstrate we’re entitled to Mr. Cuban’s fees in defending this matter,” Christopher Clark, a lawyer for Cuban at Dewey & LeBoeuf LLP in New York, said.

In his ruling, Fitzwater said he was “unaware of any reason to deny a party reasonable discovery when seeking attorney’s fees.” The judge set a Feb. 1 deadline for the information gathering to be completed. He said he’s not sanctioning a “fishing expedition” and quoted a court decision holding that the “inner workings of administrative decision-making processes are almost never subject to discovery.”