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Martha Stewart Trading Scandal Essay

533 Words3 Pages

Martha Stewart's trading scandal brought significant attention to the role of regulatory bodies such as the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) in ensuring the integrity of financial markets. As such, we will examine the contributions of the SEC and the DOJ in investigating and taking legal actions regarding the case, and how their efforts ultimately led to the resolution of the Martha Stewart trading scandal.

The Role of the Securities and Exchange Commission (SEC)
Investigation
The SEC played a crucial role in investigating Martha Stewart's trading scandal. They scrutinized her actions to determine whether she had engaged in illegal insider trading. The SEC reviewed Stewart's financial transactions, …show more content…

The SEC sought various penalties, including disgorgement of any ill-gotten gains, fines, and a permanent injunction barring Stewart from serving as a director or officer of a public company. Ultimately, the SEC focused their legal actions on the bases of fraudulent financial and accounting standards. As a result, Stewart was charged with securities fraud under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

The Role of the Department of Justice (DOJ)
Investigation
The DOJ, in conjunction with the SEC, conducted a parallel investigation into the Stewart trading scandal. They focused on potential criminal violations, including insider trading and making false statements to federal investigators. The DOJ's investigation aimed to establish criminal culpability and bring forth appropriate charges.

Legal Actions
In February 2004, Stewart was indicted by the DOJ on charges of securities fraud, obstruction of justice, and making false statements to federal investigators. The charges stemmed from her alleged attempts to cover up her actions and provide false information during the investigation. Eventually, Stewart was found guilty on charges of obstruction of justice under 18 U.S.C. § 1505 and making false statements to federal investigators under 18 U.S.C. §

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