Martha Stewart Case Summary
CASE ANALYSIS
THE CASE OF MARTHA STEWART
FACTS
Beginning with a small catering business in the 1970s, Martha Stewart built a vast media conglomerate spanning books, magazines, television, radio and the internet, devoted to providing helpful tips with the sign-off: “It's a good thing”. After her company, Martha Stewart Living Omnimedia, (MSL) went public in late 1999; her stake was briefly worth more than $1 billion. (New Yorker, 2003) 1
However, she was confronted with a far greater challenge in 2003, an investigation for her personal stock trading by the Justice Department and the Securities Exchange Commission. Starting in 2002 her career was rocked by a scandal involving her sale of shares in a drug company days before its application …show more content…
The broker, who was also Martha Stewart's broker, told his assistant to phone Stewart. 4 The assistant left Stewart a message about Waksal's sales, suggesting she might do the same. Stewart called the broker back and ordered him to sell. 5
"ImClone stock plummeted and Waksal was investigated. The SEC learned of Stewart's sale, and called Stewart to a formal interview. Before the interview, Stewart and her broker conspired to lie. Rather than admitting that the broker gave Stewart an inside tip, they invented a story of a "standing sell order." Stewart gave this story to the government in formal interviews.6 After a lengthy investigation, Stewart on was convicted on various charges on June 4, 2002, although not for insider trading." The SEC investigation concluded that on June 6, 2002 Stewart learned the Wall Street Journal intended to do a story mentioning her December 27, 2001 sale of her ImClone shares. Intending to disseminate false information, Stewart had her New York attorneys give the Wall Street Journal a false, misleading statement that hid the fact that she had been given the tip about Waksal’s sale of his stock and that she sold her shares knowing what Waksal’s was doing. The attorneys duly repeated the tale of the pre-set sale order and the Wall Street Journal then duly reported this item on June 7. …show more content…
Given Stewart’s links to the ImClone mess, MALO stock fell over 5% that day. After the trading closed that day, there was an apparent effort to shore up the price. Stewart issued a public statement which hid the fact that she had known about Waksal’s sales when she dumped her ImClone stock. She also repeated her story of the standing sale order, and claimed her telephone call to her broker on December 27 merely “reiterated” her instructions to sell her stock. Finally, she insisted she did not have any nonpublic information about ImClone when selling her
THE CASE OF MARTHA STEWART
FACTS
Beginning with a small catering business in the 1970s, Martha Stewart built a vast media conglomerate spanning books, magazines, television, radio and the internet, devoted to providing helpful tips with the sign-off: “It's a good thing”. After her company, Martha Stewart Living Omnimedia, (MSL) went public in late 1999; her stake was briefly worth more than $1 billion. (New Yorker, 2003) 1
However, she was confronted with a far greater challenge in 2003, an investigation for her personal stock trading by the Justice Department and the Securities Exchange Commission. Starting in 2002 her career was rocked by a scandal involving her sale of shares in a drug company days before its application …show more content…
The broker, who was also Martha Stewart's broker, told his assistant to phone Stewart. 4 The assistant left Stewart a message about Waksal's sales, suggesting she might do the same. Stewart called the broker back and ordered him to sell. 5
"ImClone stock plummeted and Waksal was investigated. The SEC learned of Stewart's sale, and called Stewart to a formal interview. Before the interview, Stewart and her broker conspired to lie. Rather than admitting that the broker gave Stewart an inside tip, they invented a story of a "standing sell order." Stewart gave this story to the government in formal interviews.6 After a lengthy investigation, Stewart on was convicted on various charges on June 4, 2002, although not for insider trading." The SEC investigation concluded that on June 6, 2002 Stewart learned the Wall Street Journal intended to do a story mentioning her December 27, 2001 sale of her ImClone shares. Intending to disseminate false information, Stewart had her New York attorneys give the Wall Street Journal a false, misleading statement that hid the fact that she had been given the tip about Waksal’s sale of his stock and that she sold her shares knowing what Waksal’s was doing. The attorneys duly repeated the tale of the pre-set sale order and the Wall Street Journal then duly reported this item on June 7. …show more content…
Given Stewart’s links to the ImClone mess, MALO stock fell over 5% that day. After the trading closed that day, there was an apparent effort to shore up the price. Stewart issued a public statement which hid the fact that she had known about Waksal’s sales when she dumped her ImClone stock. She also repeated her story of the standing sale order, and claimed her telephone call to her broker on December 27 merely “reiterated” her instructions to sell her stock. Finally, she insisted she did not have any nonpublic information about ImClone when selling her