Case Study: the Trial of Martha Stewart

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Case Study: The Trial of Martha Stewart The United States of America is one of the few western countries which has no clear definitions for “insider”, “insider information”, and “insider trading” in its law system. Therefore, people are sending to prisons for a crime that has not defined yet. It is part of a due process that people have notice of what they are doing is wrong. Martha Stewart was sent to prison, because she sold her ImClone shares as a result of receiving tip from her broker on December 27, 2001. Bacanovic, Stewart’s broker, had routine access to the material, non-public information inside of ImClone which made him an insider. The argument here is whether Martha Stewart is an insider or not? Is receiving a tip makes her an…show more content…
These two charges were not fair judgments according to what she said or did. She did not have any notice of what she was doing in the trade was a misdeed. The problem was the lack of enough clear insider trading laws in the law system. If she and her broker were involved in conspiracy, they would have been more consistent in their stories. Martha Stewart’s denial of having the information could not make her a criminal, because the problem was with the insider trading law. Besides, she would never think that Waksals would be so foolish to trade during a blackout period and commit the insider trading crime. Martha Stewart was punished way more than she should have been. She and her company suffered more than they should have. Her sentence was five months’ imprisonment followed by five months’ of home confinement. She was also fined $30,000. She also resigned her positions as the director and chief creative officer of Martha Stewart Living Omnimedia. The fair judgment would have been only the disgorgement of profit, and the interest, like the other tippees in Waskal’s family, without the imprisonment. Bacanovic was fined less than Martha Stewart which was unfair. Bacanovic was also punished for five months’ imprisonment, five months’ of home confinement, and only $4,000 fine. Douglas Faneuil was fined $2,000. He was dismissed from imprisonment because of his cooperation with federal

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