Mark Cuban (defendant) was a large minority shareholder of Mamma.com. The company decided to raise capital through a private investment in public equity (PIPE). Mamma.com’s CEO informed Cuban of the planned PIPE offering. Cuban responded by saying: “Well, now I’m screwed. I can’t sell.” Cuban agreed, though, to keep the information confidential. The CEO told Cuban that if he wanted more information he could call the investment bank overseeing the PIPE. Cuban did so and learned that Mamma.com was selling the PIPE at below market price. Soon after this conversation, Cuban sold all of his Mamma.com shares without telling Mamma.com that he intended to do so. Mamma.com then publicly announced the PIPE offering, and the company’s stock declined. Cuban would have lost more than $750,000 had he not sold when he did. The Securities and Exchange Commission (SEC) (plaintiff) brought suit against Cuban under the misappropriation theory of insider trading, claiming that Cuban violated § 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The district court granted Cuban’s motion to dismiss, finding that the SEC failed to demonstrate that Cuban’s conduct was deceptive, as required under § 10(b). The SEC appealed.