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Nov 17, 2008 | Comments

Cuban was recently accused of Insider Trading by the SEC. Though I have full faith that Cuban will be exonerated, it reminded me of a similar story about Charles Schwab.

Schwab was the darling of the steel industry in 1921. He had just finished serving the government during WW1 after being conscipted to lead a ship building company. Schwab was endlessly praised by the press for his patriotism.

After a standard audit by the government on the ship building company, he was suddenly accused of pocketing $100,000 in business-related expenses. The accusation created a serious blot on his integrity. 80 years ago, information was not nearly as transparent as it is now, and there was little that could be done to sway immediate public opinion.

What did Schwab do? In a hearing the following day he asked someone to point out his accuser. He walked up to him and said, “I do not believe I know you and I don’t recall ever having met you. You have ruined my reputation. You have done me an irreparable injury. Why did you do it?”

Cuban may not have quite the support Schwab had, but he fired off a response to the SEC:

“I am disappointed that the Commission chose to bring this case based upon its Enforcement staff’s win-at-any-cost ambitions. The staff’s process was result-oriented, facts be damned. The government’s claims are false and they will be proven to be so.”

Instead of this wimpy (though legally intelligent) response by Cuban, I would have hoped to have read a statement with more fire. Every supporter of Cuban is likely having a “Say it ain’t so, Joe” , and they need something grab onto. The media is targeting him from every angle. Uninformed writers are evoking his support of “short-selling” and antics with the Dallas Mavericks. They are abusing his reputation in every way.

If he does stay quiet, and if he is acquitted, shouldn’t he have every right to say to the SEC commissioner, as Schwab has 80 years ago, face-to-face, “You have ruined my reputation. You have done me an irreparable injury. Why did you do it?”

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