The SEC alleges in a civil action that Mr. Cuban sold his entire 6% ownership stake on June 28, 2004, after learning that Mamma.com was raising money through a private investment in a public entity, or PIPE. The next day, on June 29, the company announced the PIPE financing and shares of the company dropped by more than 10%. By selling his stake, the SEC alleges, Mr. Cuban avoided more than $750,000 in losses.

In a PIPE transaction new shares are issued at a discount to the current trading price. An announcement of a PIPE transaction is often followed by a drop in the stock price as shareholders anticipate their stake will be diluted.

On one hand, I sort of admire all the time and money that Cuban puts into the Dallas Mavericks. I don’t think he actually knows all that much about basketball, but most owners don’t commit that much of themselves to the teams they own. Cuban is out there just about every night, cheering his team on. He’s also not afraid to make bold (but dumb) trades like the one that brought Jason Kidd to Dallas.

Then I think about how Cuban made his fortune. He started a company called Broadcast.com during the “internet boom” and he eventually sold the company to Yahoo for $5.9 billion in stock.

Most investors lost their proverbial asses during the internet bubble, but Cuban somehow walked away with almost $6 billion. Either Cuban was really smart to get out when he did or he was lucky enough to have the perfect timing.

Now there’s the news that this billionaire is willing to risk criminal prosecution just to save $750,000 on some stock. What’s the point? So you learn the company you own stock in is about to dilute your shares – is it worth the risk to save $750 K on the deal? Even if he doesn’t go to jail, he’s given himself a black eye as far as the public is concerned.

That doesn’t seem all that smart to me.