Martha Stewart Case

Topics: Martha Stewart, Martha Stewart Living Omnimedia, Martha Stewart Living Pages: 6 (2144 words) Published: May 14, 2011

This case analysis offers facts and opinions about Martha Stewart committing insider trading. It will examine how Martha knew about ImClone stock dropping and how she uethically spiraled out control. Severel articles will be used to support how Martha was sentenced and This study notes that the light sentence for insider trading that resulted in a nearly 37% gain for Martha Stewart Living Omnimedia, Inc. also may have been responsible for a small but significant average loss for industry rivals on the sentencing date. The sentence that was ‘good’ news for Martha was also ‘bad’ news for her competitors on the sentencing date.

In the two and a half years since her release from Alderson Federal Prison Camp in West Virginia, where she spent five months for making false statements to U.S. government investigators about her role in the ImClone insider trading scandal, Stewart has jump-started her stalled company and moved forward full-throttle into a rich, packed, larger-than-life life. The article examines how Martha Stewart staged her comeback after spending time in prison for lying to government investigators about a suspicious stock trade. Stewart plotted her comeback almost from the day she was convicted. The author suggests that Stewart's return may be the strongest evidence yet of her strategic sense and business acumen. To power her comeback, Stewart relied on the assistance of such people as Susan Lyne, CEO of Stewart's company, Charles Koppelman, her sidekick on "The Apprentice: Martha Stewart," Mark Burnett, Ann Richards and Jeff Zucker. In many ways, the attention paid to "The Apprentice" is a sidelight to a larger business challenge facing Stewart's company, Martha Stewart Living Omnimedia (MSLO), and that is MSLO's partnership with Kmart. INSETS: Backstage at Martha Inc.;Martha Speaks;The Winner Is…;Kmart? Kmartha

What started out to be just an insider trading scandal with ImClone a, biopharmaceutical company, became a white collar crime with Martha Stewart Living Omnimedia Inc. The CEO of ImClone was good friends of Martha Stewart, who happen to have shares in his company. Dr. Waksal, CEO, thought he would give his family and friends a heads up about the stock declining as soon as the FDA announced the denial of the new cancer drug Erbitux. With this news the CEO made unethical decisions that ended up putting Martha Stewart in the spotlight. This case analysis will discuss the ethical issues, if Martha Stewart did commit a serious crime or was she a scapegoat, did the media help or hurt her case, was her sentence appropriate; should Martha continue to be a part of her company after her sentence, and what is Martha’s current situation today after it is all over. Ethical issues:

* Dr. Waksal decided to try and sale his stock for $5 million through brokerage accounts at Merrill Lynch & Co. and Bank of America Corp knowing that he would be violating the law and ethics of fair trade. * Then his father, daughter, and close friend Martha Stewart all sold shares before the bad news broke about the FDA refusing to accept an approval for ImClone’s promising new Erbitrix cancer drug. * A spiraling effect happened after Martha was under investigation for insider trading of ImClone stock that made her and other executive’s sale their stock in her company, Martha Stewart Living Omnimedia Inc.

Dr. Waksal knew what he was doing was wrong he considered the alternatives available to him to minimize his losses. He knew since the selling of his stock would be based on information not available to the public it would be deemed illegal. He still decided to do it anyway. He felt obligated to protect himself and his family and friends who had invested in his company. Dr. Waksal was unable to think critically and created a conflict of interest for him and his family. A conflict of interest exists when an individual must choose whether to advance his own interests and those of the organization (Ferrell,...
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