Insider Trading
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Insider Trading
Martha Stewart, the countries top icon for homemaking has been in the eye of the public since June 2002, but not for her craftiness or culinary abilities. Stewart instead has the spotlight on her for crimes of insider trading. A tip from her former broker Peter E. Bacanovic, persuaded her into selling her IMClone stock after sharing information about a close friend of Stewarts getting rid of his shares. Stewarts companion, Sam Waksal, was also the chief executive of IMClone Systems Inc. IMClone Systems is a well-known company specializing in the research and development of therapies treatments of cancer. The stock selling was provoked due to a leak of information about The Food & Drug Administration rejecting IMCLONEs drug outfit application their cancer drug Erbitux. Before the information reached the public about the FDAs decision and share price plunged, Stewart sold her 3,928 shares of IMClone. Martha sold her shares at $58, and by the time the news hit, prices fell to $45, resulting in a savings of only 50,000 for the celebrity. But the whole situation of the Martha Stewart case is not a question of insider trading but a question of ethics and management in business: its an issue of ethics and the choices people have between right and wrong and the determining factors that cause us to make those choices. While researching this subject I have found many interesting topics. One topic I found very interesting was the fact that a highly qualified executive of Merrill lynch, one of the top brokerage firms in the world, was Martha Stewarts financial advisor. Another interesting point is that Martha Stewart the mom of home cookery and cuisine, a profession based on honesty and founded on the basis of motherhood would lie about the tips she took to earn an extra buck while already being a multibillionaire. After more research I found that the most important point and the topic of the whole situation was the point that even the most perfect and idolized individuals can be manipulated by money or even the thought of more money in the case of Martha Stewart.
Martha Stewart is now facing charges leading up to a possible 20 years in prison, and over 250,000 dollars in fines. Stewart faced many charges; among them were insider trading, conspiracy, making false statements, perjury, and obstruction of justice.
Before Stewarts case, the Securities and Exchange Commission had never gone after a brokers client when the broker offered information of what another client had done. The
question being debated in the business field is who is to blame in this scenario, and if it is Stewart, should her punishments be so severe? Some seem to think that the charges and trails are ridiculous. “The Securities and Exchange Commission should leave people like Stewart alone and concentrate on real corporate crooks.”(Glassman). However others look at it as something that cannot be tolerated and believe that if she is not punished to the maximum, then others will not be afraid to follow in her footsteps. On the other hand there are many people that think that people who are high up on the corporate chain should be prosecuted just as hardly if not harder then regular criminals because of all their benefits from the government. As for the average high class citizen they believe that Martha should be prosecuted because they think she is wrong and giving their class of people a bad name, which black balls the whole brokerage industry as well as certain firms such as Merrill lynch. Juror of the Stewart Trail, Chappell Hartridge, says “Maybe its a victory for the little guys who lose money in the Market because of these kinds of transactions,” Or maybe its just a sigh of relief to the rest of the guys who are doing the wrong thing still and wanted to have someone else get caught in the process and are just happy that it wasnt them. But not to play devils advocate but maybe its just the issue of having a certain issue being debated that many people know about it happening at a constant rate but never