Martha Stewart Case Reflection
|Topics:||Business Ethics, 🔪 Crime, 💵 Finance|
Table of Contents
The public figure of $45,673 damaged the image of Martha Stewart because she had committed a security fraud by selling her shares before a decline in their prices. The move was not right due to the reason the stock market was waiting for approval from the FDA about the sale of cancer medical products by ImClone Company. However, Martha Stewart received inside information regarding the sale of shares by Samuel Waksal (ImClone’s CEO) and his daughter, which motivated the act of disposing off her shares. Martha Stewart did not sell the shares in good faith but to avoid the anticipated loss that would follow after the FDA failed to approve ImClone’s product for sale to the public (Stanwick, 2009). From this perspective, Martha Stewart is guilty of insider trading since the sale was grounded on possession of nonpublic information material (Foerster, 2014).
Five months was a short time to serve in jail for committing perjury. As stated by the federal sentencing guidelines, the offense is punished by being detained in prison for approximately 10 to 24 months (Stanwick, 2009).
It is estimated that a significant number of insider trading cases happen within a period of one year. A report by Foerster (2014), disclose that in 2013 at least 43 civil insider trading activities were filed by SEC (p.12). Among them, only 6 cases were started as administrative proceedings. In the year 2014, only 13 defendants in SEC administrative proceedings received civil penalties (Foerster, 2014).
All in all, it is predicted that a great number of insider trading cases will be seen in the future after the implementation of insider trading law.
- Foerster, M. (2014). 2014 InsiderTradingAnnualReview.pdf.
- Stanwick, P., & Stanwick, S. (2009). Martha Stewart .pdf.