Martha Stewart's Insider Trading

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From being a very successful businesswoman to calling a prison cell home, Martha Stewart has definitely had an interesting past couple of years. She started her career about 30 years ago with a catering business and has since built from that becoming the CEO and Chairman of Martha Stewart Living Omnimedia, Inc. Her success also includes the publication of her magazine Everyday Living, being the commercial spokeswoman for K-Mart, and having her own popular television show, From Martha’s Kitchen. She had built the reputation of being a public figure with how-to advice on creations in the kitchen to gardening. Despite these accomplishments, Stewart managed to become entangled in some insider trading scheme that damaged not only parts of her career, but also her public image. Insider trading is the act of purchasing or selling securities based on material, nonpublic information. Information is consider to be material if a reasonable person would use it in such a way that would persuade them to partake in an exchange of securities, or if it was reasonable to believe that it would affect the market price of a security once the information has become public (Carlin 2003). Information can only be acted upon once it has been made public, otherwise, unfair trades would take place that could negatively affect the general public and shareholders of the company. Those who are employees of the company upon employment have a signed agreement to put the interests of the shareholders first. Acting on tips from within the company or other sources could negatively affect the corporation’s success, resulting in a shareholders loss. Martha Stewart became involved with an insider trading scandal back in December of 2001. Suspicion came about when S... ... middle of paper ... ...her own. The homemaker, Martha Stewart, committed an illegal act of insider trading which made her a new home in prison. Works Cited Caillavet, Cynthia A. (2004). From Nike v. Kasky to Martha Stewart: First Amendment Protection for Corporate Speakers’ Denials of Public Criminal Allegations. Journal of Criminal Law & Criminology, 94 (4), 1033-1067. Retrieved December 15, 2010 from http://search.ebscohost.com/login.aspx?direct=true&db=afh&AN=15385502&site=ehost-live Securities and Exchange Commission, Litigation. (2003). Complaint: Martha Stewart and Peter Bacanovic. Retrieved December 11, 2010 from http://sec.gov/litigation/complaints/comp18169.htm Shaw, Nancy (2003). Martha Stewart Does Insider Trading. Social Text, 21 (4), 51-67. Retrieved December 15, 2010 from http://search.ebscohost.com/login.aspx?direct=true&db=afh&AN=12173672&site=ehost-live

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