Martha Stewart Insider Trading Case

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Case Assignment The Martha Stewart insider trading case was a high profile case filled with uncertainty. In order to say whether or not Stewart handled her indictment responsibly, it is necessary to start with an assumption regarding her guilt or innocence. For the purposes of this paper, based on the information I have read about the case, and based on the fact that she was found guilty of all counts (although not all specifications) in her stock conspiracy trial (with the exception of the security fraud charge which was thrown out), I will assume that she is guilty. (courttv.com) Based on that assumption, there are several reasons that Martha Stewart did not handle her indictment responsibly which can be summarized in a recap of the charges: she lied about receiving illegal information leading her to sell her stock, she lied about having a prearranged agreement to sell her stock when it fell below $60 per share, she tried to hamper the investigation by providing false information, and she worked with her broker to obstruct justice and make false statements regarding the scandal. (chicagotribune.com) As the CEO of Martha Stewart Living Omnimedia (MSLO) and as a successful businesswoman motivated to protect her own personal interests, it might be easy to understand the temptation behind her decisions, but the discussion here will be based on whether or not her decisions were responsible. Martha Stewart was licensed to sell securities and worked as a securities broker for a period of time from about 1968 to 1975. From that experience, and from being a client of Merrill Lynch & Co., Stewart was familiar with the duties of trust and confidence owed to the clients of Merrill Lynch. It is known for sure that ImClone submitted a Biologics Licensing Application (BLA) to the Food and Drug Administration (FDA) around 31 October 2001. It is also known that the FDA must make a decision on the BLA within 60 days per FDA regulations. It was public information that the FDA decision was expected by the end of December 2001. On the morning in question, 27 December 2001, Peter Bacanovic, Stewart’s broker, was informed that Samuel Waksal, the CEO of ImClone, was looking to sell all of the family’s ImClone shares held at Merrill Lynch. Without speculating as to the phone conversations that happened that day between all the

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