Case Study 2
The Trial of Martha Stewart
The Central Issue:
Did Martha Stewart commit the crime of insider trading when she sold the ImClone
Recommended Course of Action:
Martha Stewart did commit the crime of insider trading when she sold her shares
for ImClone. She should'nt have sold her shares when she was told that the rate of
ImClone's shares is going to drop because it was an inside news that after FDA's
disapproval of the drug ImClone's shares will drop significantly.
Basics of Recommendations:
1. Martha Stewart was well aware of the fact that she's doing insider trading, she
tried to cover up her crime, she had meetings with Bacanovic and Faneuille to
talk about how to stick with their first statement, This added to the severeness of
this crime and shows that they were all in this together and Martha knew that she
was doing something illegal and felt the need to cover up the facts.
Case Study 2
2. Martha Stewart tried changing the text of Bacanovic's message but then she
didn't do it, This shows that Martha Stewart knew that she's into something illegal
and had a clear idea of what she's doing is not right. She should've listened to
her instincts at that time and should've confessed right away
1. One of the alternatives is that Martha Stewart could have bribed both Bacanovic
and Faneuil and told them not to leak the information about the crime. This
alternative is rejected because it is not ethical.
2. Another alternative is that Martha Stewart could've put all the blame on her
broker and should've stick to the point that she had no idea what was going on.
This is rejected because brokers don't have authority to make such big decisions
and there was proof in form of Bacanovic's message which he left for Martha on
December 27, 2001 and told her that there's something going on with ImClone...
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