ipl-logo

Insider Trading: The Martha Stewart Case

382 Words2 Pages

The trial and subsequent conviction of Martha Stewart on March 6, 2004, was as a result of insider trading and her attempt to cover it up. On December 27, 2001, she received a call from her stock broker’s assistant in regards to 3,928 shares that she owned in a bio pharmaceutical company called ImClone systems. She was informed that the co-founder Sam Waksal and family were selling all of their shares which prompted her to sell hers also. ImClone’s resources had been allocated for a decade into the development of a colon cancer drug named Erbitux. After executives received word from a source within the FDA that it wouldn’t be approved, knowing that once this info was made public the stock price would drop, Waskal decided to sell. Stewart’s broker insured that she received this information and would have the opportunity to sell quickly also. These rather unusual trades created a red flag and prompted investigations by the SEC, FBI, and U.S. Attorney General’s Office. Pete Bacanovic fabricated the story that Stewart had instructed him to sell stocks that had dropped below $60 dollars. They stuck to their stories to the bitter end.

The Martha Stewart case reveals the unethical behavior that sometimes exists amongst the social elite. The average every day investor doesn’t always have access to the same …show more content…

This law against inside trading formalized the ethical expectation of a fair stock exchange where investors have equal access to information and as a result any loss or gain is not because of manipulation. Waskal and subsequent Stewart were guilty of a white collar crime because her economic offense was done with deception. In addition Merrill Lynch employees, Faneuil and Bacanovic, violated their code of conduct which states that the company protects the confidentiality and security of client information, which includes

Show More
Related

  • Court Case Of John And Timothy Rigas

    771 Words  | 4 Pages

    In the case of Adelphia, the individuals found guilty in this case neglected their duties as managers and their duties to the SHAREHOLDERS. With the positions as Chairman of the board of directors, President, and Vice President, they all had "fiduciary duties to both the corporation and its shareholders" Beatty & Samuelson (2016). The SEC's suit against them for multiple frauds on different counts, did not protect them from the BUSINESS JUDGEMENT RULE based on the fact that they weren't acting in good faith by putting the company in debt and manipulating statements to conceal the

    Read More

  • Foreclosure Issues In The CIBC Wood Gundy Case

    824 Words  | 4 Pages

    Regardless, Saturley was well aware of the his positions code of ethics, as well as the seriousness of unauthorized discretionary trading. It turns out that this is not the first time he had been punished for such actions; he had also been reprimanded for discretionary trading in 2004, investigated again in 2007 and had received numerous CIBC bulletins warning against discretionary trading. He had several warnings, and yet continued to perform such

    Read More

  • Why Is Martha Stewart Illegal

    348 Words  | 2 Pages

    Whether, Stewart sold her shares based on a prior sell agreement or based on information given to her by Mr. Waksals. In the first, situation she is innocent of wrongdoing. In the second, situation she traded on confidential information that the Waksals were selling. However, we can only speculate if this material was enough for convicting her for a crime. We cannot deny that this information is

    Read More

  • Court Case Brief-US V. Martha Stewart And Peter Bacanovic

    991 Words  | 4 Pages

    In the civil securities fraud context, the Supreme Court has held that intent indicates that the plaintiff act willfully with a realization that she was acting wrongfully, Ernst & Ernst v. Hochfelder, 425 U.S> 185, 193, 47 L.Ed. 2d 668, 96 S. Ct. 1375 (1976). Or in the criminal securities indictment did the plaintiff have a mental state embracing intent to deceive, manipulate, or defraud, United States v. Dixon, 536 F.2d 1388, 1395 (2d Cir. 1976). The issue is not which definition of intent to apply, but whether, taking into account the heightened standard of proof in criminal cases, is there sufficient evidence of Stewart’s intent to deceive investors.

    Read More

  • How Did The Gilded Age Affect The Economy During The Gilded Age

    467 Words  | 2 Pages

    The business world wasn’t the only thing corrupt but the railroads were too. With the railroad industry growing the companies knew they could charge huge rate and gain a large profit. Congressmen were paid off to be quite about the scandal and kept it to themselves. The railroads raised the stocks and were given to well-liked companies.

    Read More

  • Financial Case Review: The AIG Scandal 2005

    703 Words  | 3 Pages

    The AIG Scandal 2005 started when AIG management was issuing a press release describing its third quarter earnings in 2000 to the public. The report showed that the premium of AIG was significantly increasing, while its loss reserves was decreasing by $59 million. However, according to many industry analysts, along with the positive earnings, AIG in fact should show an increase in its loss reserves as well. This caused the investors of AIG suspected that AIG was drawing down its loss reserves to boost its profits. The suspicious of the investors has unfortunately led to the falling of AIG stock price from $99.60 to $93.30 on New York Stock Exchange (NYSE).

    Read More

  • Great Depression Dbq

    632 Words  | 3 Pages

    The Great Depression was a difficult time in American history. Many families and businesses suffered due to the stock market crash. Despite the stock market crash being a contributor to the Great Depression, the Depression did not happen because of it. There were causes that led up to the crash such as the get rich quick mentality, the Smoot Hawley Tariff, and the bank failures that led to the stock market crash and contributed to the Great Depression. Wall Street was seen as a “money trust” and “a place where insiders fleeced small investors” (Give Me Liberty, Eric Foner, pg 786).

    Read More

  • The Portrayal Of Chicago In The Gilded Age

    396 Words  | 2 Pages

    As a major shareholder, he distributed cheap shares to other representative members and even the vice president. Due to some misshapes with an acquaintance, letters were released about the scheme and an investigation pursued. Ames was later guilty of “[taking] more than $23 million … for their personal use, including sharing the stolen funds with congressional members” (Pickens, Donald

    Read More

  • How Does Publix Use A Strict Code Of Ethics

    140 Words  | 1 Pages

    However, it does use a strict Code of Ethics of policy. It lists one strictly for financial executives, which is filed with Securities and Exchange Commission. In addition, there is a Summary of this Code of Ethics that is given to

    Read More

  • Factory Workers In The Late 1800s And Early 1900s

    709 Words  | 3 Pages

    The factories poor workers like Joe worked long hours in were extremely dangerous. Many workers at the time where mutilated or even killed in these factories. Those who didn't die from the injuries were more likely to get laid off then get compensation. The factory owners didn't care there were tons of people who were willing to take the job to try to support their family. That's way the business owners of the late 1800s and early 1900s were robber barons and because they also got rich by using poor cheap labors, they used shady business tactics to cheat investors out of money, and they thought they were superior to their fellow man.

    Read More

  • Corruption Of Women In The Great Gatsby

    572 Words  | 3 Pages

    As shown in The Great Gatsby, wealth and luxury has shown to result in ethical or moral corruption of one’s self. An example would be Tom Buchanan and Jay Gatsby: being the two richest men in the novel, they are shown to be corrupted in ways that are not what people expect. While Tom was born into the wealthy life in East Egg, Gatsby was originally a poor man named James Gatz and had to work his way into becoming a wealthy man in West Egg. Tom had strong power and importance in the book and that drew Myrtle out of the Valley of Ashes and she tried to obtain Tom in order to become wealthy. Both men have no regards for the other as displayed in chapter 7.

    Read More

  • Social Class In The Great Gatsby Essay

    618 Words  | 3 Pages

    The role of social classes is one of various themes and ideas in the novel, The Great Gatsby by F. Scott Fitzgerald, that has left scholars debating for years. Since the creation of social classes, a social division between both the rich and poor has developed. The upper class is aware that their money places them in a position of power, so they belittle and treat others with no respect. This debatable topic will be supported by the novel, Their Eyes Were Watching God by Zora Neale Hurston and other critical essays by Tanfer Emin and Carla Verderame. They all share the same concluding idea that wealth can corrupt the human mind along with society.

    Read More

  • Wells Fargo Ethical Theories

    468 Words  | 2 Pages

    Under this approach, an action is considered morally bad because of some characteristic of the action itself, not just because the product of the action is bad. Wells Fargo unethical practices demonstrates unethical behavior, under deontological ethical theories as its employees duty to operate in an honest and fair fashion , in providing services to the public. Wells Fargo codes of conduct does not permit sales practices of these sort, therefore the employees who participated in these practices made unethical decisions. Unfortunately there was a wrong-doing on a massive scale. The acts of unethical behavior were conducted by both the employees and management.

    Read More

  • Examples Of Unethical Behavior In Business

    1191 Words  | 5 Pages

    A) Introduction Unethical behaviors in business affect everyone since you either work in the field or are a consumer of its services. Unfortunately, almost every company usually has individuals who act unethically whether it is for their personal benefit or for the sake of the company they work for. Unethical behaviors in business might be as simple as using company property or funds for personal gain to inside trading and financial fraud. According to The Chartered Institute of Management Accountants, nearly one third of business professionals feel pressured to compromise their ethical standards and are increasingly pushed towards unethical behavior. Moreover, “misconduct is common and accepted by business services professionals, the integrity of entire economic systems is at risk”, states Jordan A. Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow law firm.

    Read More

  • Lehman Brothers: Financial Fraud In 2008

    2178 Words  | 9 Pages

    Executive Summary Lehman Brothers were an investment bank involved in transactions worth billions of dollars and one of the most powerful investment banks in the world. Lehman Brothers collapsed in 2008 following bad investment in the sub-prime mortgage market and used bad accounting practices called Repo 105 transactions to try and cover up the bad assets. This report sets out the use of the fraud triangle when describing the actions which led to the collapse. The pressure applied on the bank, the opportunity due to the lack of regulation to carry out the actions and the ability of the bank to rationalise their decision making.

    Read More

More about Insider Trading: The Martha Stewart Case

Open Document