Martha Stewarts Case Study

Martha Stewarts Case Study

Introduction

Martha Stewart is known as one of the expert business person. She is very popular among the people even after a highly exposed scandal. She founded the Martha Stewart Omnimedia Inc. and was also the former CEO of the Company. Omnimedia is a company that has awareness and interests in merchandising, publishing, television, e-commerce and interrelated International partnerships.

Synopsis

Securities Exchange Commission (SEC) indicted Martha Stewart, which owns over 60% of Martha Stewart Living Omnimedia (one of the best known companies in the United States), the insider. In December 2001, Martha Stewart had sold 4,000 shares of biotech company ImClone, just two days before the Federal Drug Administration (FDA) denied approval of this new drug patented by the company. Coincidentally, Samuel Waksal, ImClone's chairman, was a close friend of Stewart and especially her daughter, with whom he had maintained relationship. It was he, who informed him of the fall of that action. According to Stewart, the broker was instructed to sell all shares, just down the value of certain level.

Overview of the Insider Trading Case

Martha Stewart, 62, and her broker Peter Bacanovic, 41, were charged with conspiracy and obstruction of agency proceedings by making false statements to the government official. The defendants also are charged with criminal fraud and violation of the law 15 USCS 78b. The government said the defendants lied about the reason why the shares were sold, that Ms. Stewart had in Imclome Company. Later the government discovered that the material that had been accused Stewart was totally false, and statements from the sale of the “stocks” with intent to defraud and decide invent gradually fraying. (Jennings, 2004).

The court found sufficient evidence to prosecute the case, and that the defendants used their influence to market in the insurance company. That's when they put the accused criminal charge (charge of security fraud). While Stewart based his defense on the sale of ImClone shares were automatic result of an order given to your broker if prices fell below $ 60 had to sell. After two months into the hearing, where witnesses have stated as employees and people close to the entrepreneur, the jury proceeded to process and begins deliberations the next few weeks, because the prosecutor believed that Stewart lied to keep his image see damaged by scandal. According to calculations by the prosecutor, the entrepreneur could have lost up to 30 million if the actions of his group would have collapsed. In fact, self-procedure states that both conspired to fabricate a fictitious explanation of sales and try to mislead investigators.

Stewart pleads not guilty, defended with the argument that just sold the stock because this day was activated in order to sell had titles exceeded the price of $ 60. After several lawsuits took a new turn to federal court withdrew the more serious charge that Stewart faced as U.S. District Judge Miriam Goldman decided to withdraw the charge of misleading shareholders, the decision was made five days before the selected jury begins its ...