Cuban (D) purchased 600,000 shares of Mamma.com, a 6.3% stake in the company. In the spring of 2004, Mamma.com decided to raise capital through a private placement known as a PIPE (“private investment in public equity”). As the PIPE progressed toward closing, Mamma.com decided to invite D to participate in the PIPE. The company’s CEO was instructed to invite D and to first make sure that D understood that he would have to keep the information about the offering confidential. The CEO prefaced the call by informing D that he had confidential information to convey to him. D agreed that he would keep in confidence whatever information the CEO intended to share with him. The CEO told D about the PIPE offering. D became upset and angry during the conversation, saying, among other things, that he disliked PIPEs because they dilute stock value for existing shareholders. D told the CEO, “Well, now I'm screwed. I can’t sell.” The CEO sent him a follow-up email stating “if you want more details about the private placement, please contact . . . [Merriman]” and provided the telephone number of the Merriman sales representative. D called the Merriman sales representative that afternoon and spoke with him for eight minutes about the PIPE. The salesman provided additional confidential details about the PIPE, and, in response to D’s questions, told him that the PIPE was being sold at a discount to the market price and offered other incentives for the PIPE investors. Immediately after hanging up with the sales representative, D called his broker and told him to liquidate his entire 600,000 share position in Mamma.com. At 6:00 p.m. on June 29, after the markets had closed, Mamma.com publicly announced the PIPE offering. The stock price closed down 8.5 % from the June 29 closing price. D avoided losses in excess of $750,000 by selling his Mamma.com shares prior to the public announcement. D never disclosed to Mamma.com that he was going to sell his shares prior to the public announcement of the PIPE, but later publicly stated that he had sold his shares because the company was conducting a PIPE. The SEC filed a complaint against D alleging that he had traded based on material, nonpublic information in violation of Section 17(a), Section 10(b), and Rule 10b-5. D moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim and Rule 9(b). D maintains that to establish liability for insider trading the SEC must demonstrate that is conduct is deceptive under Section 10(b) under state law standards. D contends that the SEC has merely alleged that he had entered into a confidentiality agreement, which is insufficient to establish misappropriation theory liability because the agreement must arise in the context of a preexisting fiduciary or fiduciary-like relationship and the facts pleaded do not demonstrate that he had such a relationship.