Martha Stewart Found Guilty

[nccdee]

Whats the harm?

Ok, Darth. I want to start a company. I sell 49% of my company in stock for $10. You buy my stock and I am able to make a successful business. But I really want to own all of my company. So I start the rumor on Wall Street that I am a about bankrupt. So everyone panic, including you and you end up selling your stock for $2 (remenber the assest of the company alone is worth $10). I buy up all the stock and it quickly returns to $10.

Then I release the annual report which showed I make a huge profit in selling my product, so business was good (oh, lets also add that I was going to be offered a huge government contract but decided to keep it a secret until after I bought back my stock). Since I now own all the stock, I get all the profits. The original stockholder lost $8 in their investment and also lost their share of the profits (dividents). Because of the success in sale combine with my assest, the next time I sell my stock on Wall Street, I will value new issue stock at $20.

What's the harm? Can you imagine companies being run not on selling a product but souly on manipulating the stock on rumors and lies (or even withholding information)?

The idea of stockholders is that everyone shares the profits and losses together. Martha and the CEO are not exempted from that. Thats the risk in being investor. Once again, all information is to be share equally to all shareholders. The CEO is the boss to employee of the company, but his boss is the stockholders. For him to use information for his own use is not just unethical but illegal (he sold his stock based on information that was meant for the company, which, yes, would effect the stock).

BTW. To prevent a stock from tanking from bad new (especially when it will be dramatic), a company can contact the SEC and tell them to suspend all trading of their stock (no one can buy or sell). This is exactly what Marth's OmniMedia did on the day the vertict was given.

Enron is the same principle but on a larger scare. They were manipulating information about the company's finance to get the stock to go up, then the Executives would sell their stock at a high price but tell everyone else to buy. Imclone CEO wanted to keep the stock high so he could sell, and was telling everyone to buy or keep their stock.

nccdee

[Darth Marley]

I am not saying that stock manipulation is moral, or that it should be legal.

The gist of the Martha case is that she sold shares she had inside info would tank.
The cover story was that there was a "stop loss" order to sell at $60/share.
Whether this is a lie or not, nothing she did had a significant effect on Imclone share prices.

The FDA announcment that the new drug was not going to be approved did have an effect on the share price.

Did she lie to investigators (upon whom the burden of proof was bestowed) is certainly possible, but with the dismissal of the insider trading charges, the rest of the case should have been tossed in my opinion.

The notion that little old ladies lost money because of her actions is certainly not proven to my satisfaction.

Enron, Global Crossing, and Worldcom do meet that test, and I would love to see the responsible parties do some hard time.

So my question stands, what was the harm in Martha not losing money in this deal? Who out there lost money just because she didn't?

[nccdee]

It was not her action that effected the stock. It was the fact she benefited from the information.

The CEO was not going to testify that he told Martha to sell the stock because of the information he had. But the fact she attempted to cover it up, showed she knew that what she did was wrong. It hard to prove insider trading. The CEO admitted it (now serving 6 years) but wasn't going to testify against Martha that she knew. He could have simply said to her, "Hey Martha, now is a good time to sell your stock" and left it at that.

The juror said that it was proven by a reasonable dought that Martha knew she did something wrong because she attempted to take action to cover it up. Just because you could not prove insider trading (which was thrown out because there was no other evidence to prove it, unless the CEO was willing to testify to that, which he refuse to do) you don't throughout the entire case.

Just because it a smaller crime doesn't make it any less of a crime.

nccdee

[shiningstar]

Originally Posted by Darth Marley

I am not saying that stock manipulation is moral, or that it should be legal.

The gist of the Martha case is that she sold shares she had inside info would tank.
The cover story was that there was a "stop loss" order to sell at $60/share.
Whether this is a lie or not, nothing she did had a significant effect on Imclone share prices.

The FDA announcment that the new drug was not going to be approved did have an effect on the share price.

Did she lie to investigators (upon whom the burden of proof was bestowed) is certainly possible, but with the dismissal of the insider trading charges, the rest of the case should have been tossed in my opinion.

The notion that little old ladies lost money because of her actions is certainly not proven to my satisfaction.

Enron, Global Crossing, and Worldcom do meet that test, and I would love to see the responsible parties do some hard time.

So my question stands, what was the harm in Martha not losing money in this deal? Who out there lost money just because she didn't?

I'm with YOU on this one Darth ...................well said

[thomas7g]

It is possible to criminally impede the investigation of an innocent act.

A similiar example, Clinton have sex with Monica is disgraceful to the office of the President, but not illegal. His lying to the Grand Jury to cover it though is a crime.

And in court you can commit purjury even though you aren't the one charged with a crime. Lie when giving testimony And then go to Jail for it.

[nccdee]

Cases are decided on based on evidence and truth of someone's testimony. Jury's decision much determine if what they heard is the truth. There must be consequences for not telling the truth in court.

Thomas7g, when someone lies and the person get off. Then they find out you lie to help him get off. Then, yes, you are just as guilty for aiding and abedding in that the crime and should go to jail (although you would only be charge with perjury). The person who committed the crime can't be charged again because of Double Jeorardy law, so he walk free. As for Clinton, exactly right, he lied and yes, they could have charged him. If they had, Clinton would have pleaded it out and would have just received a fine and probation.

Remember, Martha did a willful act to deceive and cover up, after the facts come out. Martha's assistant broke down and cried on the witness stand. Her belief in telling the truth out weighed her loyalities to Martha.

Martha did have an opportunity to plead it out about a year ago (it would have been a misdemeanor and a fine, no jail time). It would allow her to continue with her company and only a light tarnish image, which she could have easily bounce back from.

nccdee

[cobrastrikelead]

For such a small amount of money, Martha's actions were fool-hardy. But I would guess that she is a rather competitive person, and she hates to take a loss. And given that she is something of a celebrity, that puts a bulls-eye on her back, too. Courts are very reluctant to reverse Jury-decisions. If it is her first-offense, I would think probation would be sufficent. But who knows?

I like Martha's show and have nothing against her. I hear the bad things about her but I don't care either way.

That being said the news says the government offered here a plea deal last April that would have given her no jail time if she simply admited what she obviously did. She refused to take it. She obviously knew she was guilty. She figured she could beat the system. Now that its time for her to be sentenced they say the smartest thing she should do is come clean and ask for mercy. She continues to lie and proclaim her innocence. At this point she either still thinks she can beat the system on appeal or is to proud to admit the truth. Either way she is still digging herself a deeper hole.