What did Martha Stewart do?

Today our social studies teacher assigned my class a project. We had to research a recent event and write a report about it. I couldnt think of anything and "Martha Stewart" kept popping into my head so guess who I picked? After class I was walking down the hallway, and asked myself, "who the hell is Martha Stewart???". I understand I am kinda (ok, REALLY) uninformed about this but I dont usually pay attention to events dealing with law. I cant really understand that many law terms and stuff either. I searched around the web and nothing I was actually able to easily understand. So can someone provide some easy facts? Like how she was bad? I believe I heard something like scamming her own company and lying to government agents.

I hope this isnt a touchy subject? And for those who mean to express their feelings in this thread, I dont mean to be rude, but BACK OFF. I really dont want this thread shut down or I want it to at least be kept alive long enough for me to gather some useful information. PLEASE I AM BEGGING YOU. Please? (They really have to make some begging smilies)

She had inside information that a publicly traded stock which she held some of was about to tank, so she dumped it just before the news went public, leaving other stockholders holding the bag and losing lots of their own money.

Then she lied to investigators about the whole thing.

That's it in a nutshell.

Mags,
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.

Here are some links to explain it better:

http://economics.about.com/cs/finance/a/insider_trading.htm

http://slate.msn.com/id/2093610/

That should be enough info to keep you going awhile, if you want more just google search
Martha Stewart insider trading

Martha Stewart traded stocks (sold them) based upon knowledge that wasn't available to the normal shareholders. That's called insider trading. However, she went to prison for lying about it and trying to cover it up when she was confronted by the Fed's.

She was caught redhanded and probably wouldn't have spent a single day in prison if she had just admitted she traded on inside information.

The silliest part of all is that her illegal trade would have only saved her $31,000 in losses in the stock value. She probably spends more than that on toilet paper in a year. Here's a woman worth several hundred million dollars lying about a transaction that saved her a $31,000 loss. WTF was she thinking?????


Ordin

So basically her company was working on some product, and she was the first to know that it wasnt going to bring in any money, so she just sold all the stocks before the lower value of them was confirmed/realized/discovered etc?

Edit: How did she lie to the investigators?

[ QUOTE ]
Ordin_Aryguy said:
Martha Stewart traded stocks (sold them) based upon knowledge that wasn't available to the normal shareholders. That's called insider trading. However, she went to prison for lying about it and trying to cover it up when she was confronted by the Fed's.


[/ QUOTE ]

Good synopsis, Ordin.

You might ask your local librarian to point you to some sources. This story has a lot of interesting elements beyond the legal ones that could make an interesting paper. For example, whether or not Martha's celebrity status and reputation as a "b" had anything to do with her sentence. Why someone that incredibly wealthy would break the law just to save a relatively insignificant (to her) amount of money. How going to prison before finishing her appeal has rehabilitated her standing in the public eye (for some), recovered much of the lost stock value of her company, and resulted in a lot of new TV deals. Whether or not she's really learned anything and connected with the "little people" she served time with or is just a master manipulator. There's been plenty written about every aspect of the case. Start reading and good luck /ubbthreads/images/graemlins/smile.gif

Thanks for the help and keeping it low guys /ubbthreads/images/graemlins/smile.gif.

Heh post # 1234....

[ QUOTE ]
Mags said:
So basically her company was working on some product...

Edit: How did she lie to the investigators?

[/ QUOTE ]

Her company wasn't involved with ImClone. She was just an ordinary shareholder. Ok, well not so ordinary, because she happened to be friends with one of the principals in ImClone. That's how she got the information prior to it becoming public.

When the investigators confronted her with the evidence they had gathered, which included phone records, a voice meesage left on her phone recorder, a hand-written note from her secretary, AND an interview with the man that called her and told her that ImClone was going to release information that will probably cause the stock's value to do the dirt dive.

She was cornered with irrefutible evidence and she still chose to lie. For that she went to jail.

If she'd have just admitted her wrong and paid some form of cash penalty she would never have spent a day in jail.

Some folks believe that the laws the govern the masses don't really apply to them for some reason.

Ordin

Part of her problem was that she once worked in the stock trading industry, so she should have been very aware of insider trading laws. She knew that selling her stock based on insider trading was illegal, and that if it was punishable by jail time.

Using insider information was probably arrogance. Lying about it was simply self preservation. Maybe some arrogance there too. Very Rich People tend to become arrogant, and she is no exception.

She probably got a lighter sentance by lying than she would have gotten had she told the truth. The goverment case was weak, and would only have succeeded if she confessed.

OH. to summarize again; She cheated. She got caught. She lied. She got caught. She was only punished for the lie.

Daniel

The most interesting elements in my opinion are:

1) she was not ever convicted or punished for the original crime of insider trading, just the obstruction of justice charge for such things as changing her secretary's handwritten phone log, etc.

2) The stock of her own company, Martha Stewart Omnimedia tanked during the scandal, but once she went to jail and people realized that the scandal would soon come to an end, the stock quadrupled in value and her own personal net worth balooned past a billion dollars while she was incarcerated. Going to jail was the best financial decision she ever made.

3) The whole mess started with a rather simple and common event. Martha received a phone call from a friend who was concerned that she would lose money on an investment and she should get rid of it. While the phone call was illegal, it is a very human thing to react to such advice in the way that she did. It is also a very human thing to deny the error when questioned about it.

4) And finally this whole thing will prove once again that when it comes to celebrity, there is no such thing as bad publicity. Look for an upcoming TV series similar to The Apprentice, featuring Martha Stewart.

Even though I asked for no opinions, I ROFLed when I read # 2. Thank you! I might put that one in the editorial of the project. Its actually a magazine we have to write, so an editorial might fit in well.

Great, you guys got it after a few posts. It wasnt the insider trading that got her in trouble, but the fact she tried to cover it up. What I found ironic later on was the fact she could of plead guilty and gotten no jail time, but she decided to stand trial. Besides that, it seems it helped her image than hurt her. I bet if any of us did something like that it would ruin our lives.

Most people say she was unfairly judged, but this was right after the disaster with tyco, enron, health cross, author anderson, and a few other corporations were caught with problems and trying to cover them up lying to the American people. Lil Kim was also caught lying too, if you want to use that to compare. Shes a rap artist who uses course language.

Last I heard Martha is going to have a channel to herself on sirius satellite radio and a show on nbc. I have no idea how a decorating channel will work on radio, but they are going to give it a try.

I just find the fact she is in her 60s hard to believe, she seems younger than that.

is there a similar crime based on BUYING stock rather than selling it? /ubbthreads/images/graemlins/smile.gif

The real tip off to insider trading is a massive sudden sell of or buy when it is in your favor. Wonder if you buy and sell short if that would still trigger an interest?

If you follow stocks, you may already see patterns where the stock jumps or declines before the report is released.

The funny thing is that she wasn't under oath when she lied to investigators, unlike a previous president.

I'm pretty sure that it's the same crime whether you buy or sell stock based on information that is not readily available to the public.

I wonder why she tried to fight it so hard. Maybe just too embarased to admit to doing anything wrong, and hoping for it to all just go away?

The one thing that I am confused about is why is insider trading a bad/illegal thing? I have never really understood that. Where is freedom of information in all of this? If I have some info that my stocks are about to dive, why can't I sell? Sure it is not as fair to the people who don't have the info, but is it really all that bad?

Among the concerns is that the person recieving the insider info consequently has an "insider" that very well may be using their position to influence the company or reports to make the stock rise or fall according to what the stockholder desires.

Its basically cheating in the business business isnt it? So it is pretty wrong.

Yes, lying is cheating and should not be done.

Stocks are a funny thing too. I mean if she had left it alone, she would of been better off in the long run, at least for the value of the stock. Of course, if she had no plans for it, it isnt a lost until she sold it at a lost. Likewise it wouldnt of been a gain unless she sold it at a profit. People play the stock market like vegas for quick gains and sometimes get burned.