The judge wrote in his 35-page ruling that the SEC could file an amended complaint within 30 days if it can allege that Cuban agreed not to sell stock when he told the company's chief executive that he wouldn't divulge secret information he was about to receive in 2004.

The SEC said Cuban avoided a loss of $750,000 by selling his 600,000 shares, which represented a 6.3 percent stake in the company.

Fitzwater, however, rejected most of Cuban's claims over how his fiduciary relationship with Mamma.com should be applied to the law.

Scott Friestad, associate director of the SEC's Division of Enforcement, said in a statement that the commission was reviewing the ruling and weighing its options.

Ralph Ferrara, one of Cuban's attorneys, said he needed time to digest the ruling but was initially impressed with what he called Fitzwater's "appellate court level" analysis.

"It sounds like unlike many trial courts on motions to dismiss, he really tried to come to grips with the fundamental legal policy questions that we raised," Ferrara said.

Cuban's attorneys at the New York law firm of Dewey & LeBoeuf said in a statement they were "grateful" for the ruling.

"The court employed a reasoned and thoughtful approach ... and chose not to be bound by labels and monikers or resort to 'technicalities,"' the statement said.

Cuban didn't respond to an e-mail seeking comment.

In a vague Twitter posting that seemed to address the ruling, Cuban wrote that Friday had been "a great day so far." In a later posting, he thanked supporters and said he wouldn't comment to reporters.

Five years ago, Mamma.com Chief Executive Guy Faure told Cuban by phone that the company was planning to raise capital in a so-called private placement in a public equity offering known as a PIPE, the SEC lawsuit said.

Faure began the conversation by saying he was about to give confidential information and Cuban agreed to keep it to himself, the SEC said. According to the lawsuit, Cuban became angry because he said PIPEs dilute stock value for existing shareholders, and he ended the call by saying, "Well now I'm screwed. I can't sell."

The SEC alleges that Cuban sold his shares hours after the phone call from Faure, before the announcement of the private offering.

Fitzwater ruled that Cuban's statement can't "reasonably be understood" as an agreement not to sell based on the information.

"Thus while the SEC adequately pleads that Cuban entered into a confidentiality agreement, it does not allege that he agreed, expressly or implicitly, to refrain from trading on or otherwise using for his own benefit the information the CEO was about to share," Fitzwater wrote.

Phillip Stern, a former SEC staffer now in private practice, said the agency could pursue an appeal rather than try to amend the Cuban complaint. He said the decision would come down to whether the agency thought it could successfully attack Fitzwater's ruling, which he said was surprising.

But another analyst said the SEC generally must prove what Fitzwater's ruling required: that defendants agreed to keep information confidential and promised not to trade on it.

"This was a frontier case for the SEC," said J.W. Verret, a law professor at George Mason University who also practiced securities enforcement law in Washington. "The SEC was straining insider trading law beyond its proper scope to catch a big fish, and it lost. It's time for the SEC to go home and lick its wounds."

The 50-year-old Cuban is a tech entrepreneur who sold his Broadcast.com to Yahoo Inc. in 1999 at the height of the dot-com boom. He bought the Mavericks in 2000.

Cuban runs a Web site called Sharesleuth.com, which bills itself as providing "independent Web-based reporting aimed at exposing securities fraud and corporate chicanery." A companion site, BailoutSleuth.com, tracks the government's $700 billion financial rescue plan.

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Associated Press writer David Koenig and AP Sports Writer Jaime Aron contributed to this report.