Martha Stewart: Not Such a Good Thing

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Case 6.10 – Martha Stewart: Not Such a Good Thing

1. What issues did Martha Stewart, Bacanovic, and Faneuil miss in making their decisions about selling the ImClone stock in their conduct following the sales? Apply the models and make a list of suggested questions they could have asked that might have affected their decisions.

I do not feel any of them were thinking about any consequences! Why was this

small amount of money so important to them, especially Ms. Stewart, who was a multi-

billionaire at the time? Maybe it was bad press, or embarrassment…who knows? It is

obvious that they weren’t concerned at all about repercussions and just went ahead with

their scheme that they truly thought they could pull off without getting caught. Well, it

so turned out that they did get caught and lost millions because their reputations and

stocks in Omnimedia were much more valuable than ImClone!

2. Was selling the shares illegal? If selling the shares was not illegal, was it unethical?

Selling shares are not illegal; it’s all part of the stock market. However, when you

have advanced knowledge like this case, it is border-line and extremely unethical. She

was thinking only of herself and the profits she’d make, and not considering the company

and other stockholders at all. I would go as far as calling it heartless and greedy!

3. What do we learn about long-term consequences from Ms. Stewart’s conduct and case?

Having too much money can turn a person evil. Martha was a multi-billionaire,

and why she cared about a couple hundred thousand is beyond me. Not only did she

serve jail time, lose respect and money, her stock has decreased more than 50% since

2001 when she was convicted. The public now sees that she is not trustworthy, because

she admitted to obstruction of justice and making false statements to federal


4. What advise can you offer someone who has engaged in trading...
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