Preview

Insider Trading: The Martha Stewart Case

Good Essays
Open Document
Open Document
159 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Insider Trading: The Martha Stewart Case
"In 2002, the Securities and Exchange Commission announced that Martha Stewart was under investigation for insider trading. She had sold 3,928 shares of ImClone Systems in December 2001, just before the Food & Drug Administration announced that it was scuttling ImClone's application to sell a new so-called wonder drug. It looked like classic insider trading, and it probably was, but oddly the feds never proved this in court, or even tried to prove it. Instead, they charged Stewart with four crimes (conspiracy, obstruction of justice, and two counts of making false statements to federal agents), all stemming from her conversations with investigators. A jury found her guilty, and she was sentenced to five months in prison. Under federal law,
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Best Essays

    Martha Stewart Living Omnimedia
    • 2080 Words
    • 9 Pages

    Martha Stewart Living Omnimedia

    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…

    • 2080 Words
    • 9 Pages
    Best Essays
    Read More
  • Powerful Essays

    Case 1.12:Madoff Securities
    • 1261 Words
    • 6 Pages

    Case 1.12:Madoff Securities

    Professional auditing standards discuss the three key “conditions” that are typically present when a financial fraud occurs and identify a lengthy list of “fraud risk factors.” Briefly explain the difference between a fraud “condition” and a “fraud risk factors,” and provide examples of each. What fraud conditions and fraud risk factors were apparently present in the Madoff case?…

    • 1261 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Martha Stewart Scandal
    • 405 Words
    • 2 Pages

    Martha Stewart Scandal

    Martha Stewert is the owner of Omnimedia which handles her show, clothing line etc. What she did was owned a large sum of stock in a biotechnology firm (ImClone) and was chums with them. She was tipped off that one of the things they researched did not pan out. The spending on the project would not yeild any sales so the expected companies profits would never be. This is a bad thing if you own the stock the way Martha Stewart did. The illegal part was that she was told that the company was not doing well before anyone else or before it became public knowledge. She sold her stock and the next day or two the company announced their problems. This caused their stock to plunge in trading but Martha sold hers right before that happened.The legal term for what she did is "insider trading" which is illegal, unethical and can land you jail time. The Securities and Exchange Commision which watches for large sales of stock right before bad news hits caught it and went after the CEO of ImClone and her. She said nobody tipped her off which is a lie so she dug herself a hole.…

    • 405 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Sec vs Ginsberg
    • 544 Words
    • 3 Pages

    Sec vs Ginsberg

    1. Scott Ginsburg served as chairman and CEO of Evergreen Media Corporation, an owner and operator of a group of radio stations. Ginsburg then began to show interest in acquiring EZ, another corporation that owned radio stations. After a brief meeting with Alan Box, the CEO of EZ, a phone call was made of which only the duration, 26 minutes, is known. The next Mark Ginsburg, the brother of CEO Scott Ginsburg, purchased 3800 shares of stock in EZ after discussing the purchase of this stock with Jordan Ginsburg, the father of he and Mark. Scott Ginsburg then talked to EZ’s investment banker, discussed the possibility of a bid, and signed a confidentiality agreement on July 16, the same day that Jordan Ginsburg purchased 20,000 shares of stock in EZ. The following day Scott received full disclosure of EZ’s financial status. Mark and Jordan continued…

    • 544 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Martha Stewart Fraud Case
    • 374 Words
    • 2 Pages

    Martha Stewart Fraud Case

    In 2003, Martha Stewart was facing prison time and her empire in domestic art was at risk because of “nine-count federal indictment” which she was charge will “perjury and conspiracy” because of a “high profile stock trading scandal” (Hurtado, N. P. (n.d.). James Comey, a U.S. Attorney, said that “she brought trouble on herself and her company by lying to her shareholders and investors in an attempt to cover her tracks and keep her stock from plummeting” (Hurtado, N. P. (n.d.). Comey believe that the criminal case was all about lying and he said that Martha is being prosecuted for what she did and not who she is. When she went to court she plead not guilty. Stewart was also charge with “securities fraud stemming” (Hurtado, N. P. (n.d.).,…

    • 374 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Texas Gulf Sulphur Case Study
    • 674 Words
    • 3 Pages

    Texas Gulf Sulphur Case Study

    violated a Civil Law by engaging in insider trading. Being the one to organize the…

    • 674 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Martha Stewart Insider Trading Case
    • 452 Words
    • 2 Pages

    Martha Stewart Insider Trading Case

    Merril Lynch tipped off the Securities & Exchange commission to report the possibility of insider trading on Imclong, and launched the joint investigation with the FBI into whether or not Ms. Stewart committed a crime. I believe that Martha Stewart was guilty of insider trading, lying and conspiring to lie, in order to protect their money.…

    • 452 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Insider Trading-2004 Trial
    • 927 Words
    • 4 Pages

    Insider Trading-2004 Trial

    Martha Stewart known for her creative decorating, her craftiness and her multi-million dollar business was convicted in 2004 for what many call securities fraud or insider trading. In 2001 she sold all of her stocks of ImClone Systems, Inc after being tipped off by her stockbroker. That sale occssionally saved her a 51,000 dollar loss.…

    • 927 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Martha Stewart case
    • 1056 Words
    • 3 Pages

    Martha Stewart case

    Besides the insider trading, Stewart did some illegal and unethical actions in order to conceal her guilty behavior. To cover up the insider trading on stock market, Stewart conspired with Bacanovic that they had an agreement on a $60 sell order of ImClone Company. In addition, she changed Bacanovic’s December 27 phone message from “Peter Bacanovic thinks ImClone is going to downward” to “Peter Bacanovic re ImClone” even though she told her assistant to restore the original wording at the end. Those actions are unethical for her to conceal the fact that she…

    • 1056 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    The Enron's Ethics Breakdown
    • 2754 Words
    • 12 Pages

    The Enron's Ethics Breakdown

    It is perhaps the most compelling business ethics case in a generation—a textbook version of what can go wrong in an organization that lacks a true culture of ethical compliance. Investors and the media once considered Enron to be the company of the future, but as its demise suggests, it was in reality not a particularly modern business organization, especially in its approach to ethics. On the surface, at least, it appeared to reject progressive innovation in governance and ethics programs and instead sought to circumvent systems that were designed to protect the company and its shareholders. The purpose of this report is not to comment on the legal or political ramifications of the case but rather to focus on the business ethics issues raised by the conduct of the company’s directors and officers, its accountants, and lawyers as it is known to date. It is meant to be a reminder that simply having a detailed code of ethics on the books (as Enron certainly did) is not enough. Organizations need to infuse ethics and integrity throughout their corporate culture as well as into their definition of success.…

    • 2754 Words
    • 12 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Martha Stewart Ethics
    • 1427 Words
    • 6 Pages

    Martha Stewart Ethics

    Before one can make an informed decision as to whether Martha Stewart's handled the incident responsibly or whether or not her actions were moral or immoral, one must first understand the basics of ethics and understand whose rights are involved and how they were affected. Then one must also examine who will be helped and who will be hurt by her actions and then make a decision based on the information and personal values as they relate to the issue. Martha Stewart was charged in 2001 with making false statements, conspiracy, and obstruction of justice during her sale of ImClone the day before the FDA announced its refusal to review a new cancer drug. This sale was scrutinized by authorities because it is illegal to have inside information and trade the stock before the bottom drops out.…

    • 1427 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Better Essays

    Overcrowding In State Prisons Essay
    • 1294 Words
    • 6 Pages

    Overcrowding In State Prisons Essay

    Martha Stewart was a celebrity homemaker who served five months in prison for lying about a stock sale. She was convicted of lying to invesitgators about why she sold ImClone stock in December 2001, just before the stock price plunged (McCabe, 2010). After going through a five-week jury trial, Martha was found guilty in March 2004 of conspiracy, obstruction of an agency proceeding and making false statements to federal investigators. She served her sentence in West Virginia and was released March 4, 2005. After her release she was placed on house arrest for five months. Since then she has made a highly successful…

    • 1294 Words
    • 6 Pages
    Better Essays
    Read More
  • Good Essays

    Martha Stewart Home Living By Levenson
    • 940 Words
    • 4 Pages

    Martha Stewart Home Living By Levenson

    In 2001 she began her representation for a corrupt financial system. She was invited to join NYSE’s 27 member board of directors. On December 27, 2001, she became engaged in the ImClone insider trading issue when her friend Sam Waksal informed her that his company ImClone’s cancer drug was rejected by the FDA. She had her broker sell her 4,000 shares valuing $230, before the news hit and later found guilty of insider trading. According to the Daniel Fund Ethics Initiative at the University of New Mexico, the charges of securities fraud against Stewart were dropped but she served five months in prison and five months on house arrest for four counts of obstruction of justice and lying to investigators (Brunet,…

    • 940 Words
    • 4 Pages
    Good Essays
    Read More
  • Better Essays

    What Is Martha Stewart Ethical
    • 1192 Words
    • 5 Pages

    What Is Martha Stewart Ethical

    Tyco. WorldCom. These companies created an environment of public mistrust of big corporations. Lives were destroyed; life savings depleted, and at the end, seemingly light punishments, if any were given to responsible parties. There was no tolerance for continued corporate impropriety. Martha Stewart sold almost 4000 (exactly 3,928) shares of her personally owned stock of ImClone in December 2001. The perception of wrong-doing came about as it related to Food and Drug Administration (FDA) disapproval of an ImClone drug. A friend of Stewart, and ImClone executive, indicated to her that the FDA would not approve the drug. Martha Stewart subsequently sold her shares of the depreciating stock, avoiding a sizeable loss. Stewart maintained that there was a pre-existing agreement with her portfolio manager to sell the stock when its value fell to $60 dollars a share, and that the FDA decision and her actions were…

    • 1192 Words
    • 5 Pages
    Better Essays
    Read More
  • Better Essays

    Case Synthesis: Morgan Stanley, Simpson Thacher & Bartlett LLP, and Oppenheimer and Co. Involved in Insider Trading
    • 912 Words
    • 3 Pages

    Case Synthesis: Morgan Stanley, Simpson Thacher & Bartlett LLP, and Oppenheimer and Co. Involved in Insider Trading

    Today’s financial market is a vibrant yet unpredictable domain, with mergers and acquisitions that sometimes cannot be predicted by the market trend or even with sophisticated information technology. With such uncertainty, investors are disposed to gain all necessary information upon making investment decisions. This puts those who handle sensitive undisclosed information in an ethical dilemma where such information can be exploited for personal gain, at the same time unknowing investors are put at a disadvantage.(Matthews) In 2013, Steven Metro, a managing clerk at Simpson Thacher & Bartlett LLP, Vladimir Eydelman, a broker at Morgan Stanley and previously at Oppenheimer & Co and Frank Tomayo, a mortgage broker were convicted of an insider trading scheme that generated $5.6 million of illicit profit. To avoid computer surveillance and traces of evidence, Tomayo passed on insider information given by Metro to Eydelman through post-it notes and by chewing them up. The insider information that involves the acquisition and mergers of companies was made available to Eydelman, his family, friends, and over 50 clients for investment decision on 13 securities over five years. To conceal traces of income in Metro’s brokerage account, he hired Tomayo as a middleman, whose brokerage account was handled by Eydelman. Upon receiving insider information from Metro, Eydelman would forge researched documents based on public information in order to avoid suspicions for timely trades. Tomayo also acted as a bridge between Eydelman and Metro to prevent direct communication between the two parties. The men were charged with conspiracy to commit securities fraud, securities fraud and tender offer frauds(SEC Complaint). Each man can face a maximum of 20 years in prison.…

    • 912 Words
    • 3 Pages
    Better Essays
    Read More

Related Topics