Martha Stewart Case

After having a very successful performance and getting second place on the first Littlefield simulation game we knew what we needed to do to win the second simulation game. We were very eager to outperform our competition and we almost did so, but ended up in second place again with a cash balance of $2,660,393.

Since 2002 Martha Stewart was investigated by the SEC and the FBI for Inside Trading but it is interesting that she wasn’t found guilty or accused on any of those charges; she was charge for conspiracy, obstruction of justice and false statement. It was her un-ethical behavior what drove her into innumerable allegations and public embarrassments. There are at least four issues in this case where ethics play a very interesting and critical role; Freedom of speech, Conspiracy, Right of property and Inside trading.

Scott Sullivan went to Cynthia and her internal audit team to ask if they could hold off on reporting their findings to the company’s audit committee and that he would take care of the findings in the next quarter. Sullivan also yanked four hundred million dollars from John Stupka, who headed WorldCom’s wireless division so that Sullivan could use that money as an income boost for the company. It led me to believe that he was going to take care of the problem in the next quarter. Only his way of think was to shift funds around that he started to do with John Stupka, or he was going to find a way to fire Cynthia and her internal auditing team. If Cynthia had taken his warning at the hair salon she and her team would also be facing federal charges with having some connection with the fraud.

Fraud, lying, conspiracy...not terms that any individual generally wants associated with their history, nonetheless with their reputation and personality, especially if that individual happens to be Martha Stewart. Martha Stewart: a name which almost every person who calls themselves an American can recognize. Her name pronounces itself across cookbooks, magazines and even has its own show on Style and The Learning Channel. It now pronounces itself with yet another captivating theme, as part of one of America's major scandals.

Overview of the Case: The Securities and Exchange Commission claims Mark D. Begelman misused proprietary information regarding the merger of Bluegreen Corporation with BFC Financial Corporation. Mr. Begelman allegedly learned of the acquisition through a network of professional connections known as the World Presidents’ Organization (Maglich). Members of this organization freely share non-public business information with other members in confidence; however, Mr. Begelman allegedly did not abide by the organization’s mandate of secrecy and leveraged private information into a lucrative security transaction. As stated in the summary of the case by the SEC, “Mark D. Begelman, a member of the World Presidents’ Organization (“WPO”), abused

SEC alleged that Mark Cuban violated misappropriate insider trading. To be qualified as misappropriate insider trading, an individual wrongfully obtains (misappropriates) inside information and trades on it for her or his personal benefit. In this case, Cuban actually traded his shares based on the material inside information he was told and saved him $750,000 in losses. Wrongful misappropriation means violation of a fiduciary duty.

Influential advocator, founder, and president of “Families Against Mandatory Minimums,” Julie Stewart, claims that her family was torn apart by the arrest of her brother. Stewarts exclaims that her brother was a first time offender of a non-violent drug related crime, but was automatically sentenced to five years in prison without parole. Stewart mentions that this is caused by the complete power of the laws that were established by Congress in the 1980s and that the judge had no discretion upon the case decision. Because of these drastically harsh laws, Stewart commences her non-profit organization in 1991 and shares various stories of other families who have suffered because of these laws. The organization began accumulating stories on how

Martha Stewart’s defense attorney was a man named Robert Morvillo, a man who had represented high profile clients such as Merrill Lynch and Amerada Hess. He has been described as “one of the city’s savviest white-collar criminal-defense attorneys for more than three decades” (Smith, “Can This Man Save Martha?”). One of Morvillo’s biggest rebuttals in the Stewart case was bringing up the fact that if Stewart were really as smart and business savvy as the prosecutor will try to make her seem by bringing up her years as a stockbroker, which should have made her realize that the sales of her stock were illegal, then why would she risk her entire company and image over a sale that would have provided her with a miniscule amount of money in comparison to what she already makes (Smith)?

I am writing to address some concerns I have about the future of your company, Martha Stewart Omnimedia (MSO). Perhaps the one issue that you are grappling with at present is about the Imclone scandal. You have been accused of selling $227,000 worth of Imclone stock based on inside information. Because of these charges of insider trading, your critics have summarily associated you with other disgraced company directors: Kenneth Lay of Enron and Bernard Ebbers of WorldCom. But the strange thing about your case is that while other CEOs have been charged for making use of their own companies to gain profit for themselves, you, on the other hand, have not

Regulators of the SEC had an easier job finding the CEO of insider trading, because when someone of that authority sells a large amount of their own company’s stock just a few days before the FDA announcement raises a large and obvious red flag. The case for Martha Stewart would be more complicated and more research had to be done by the regulators to prove her guilty. During the investigation and the court trial, a piece of information was told that could hurt Martha’s chance for proving she was not

Unethical behavior…sounds bad doesn’t it? But what employee can truly say that he is completely innocent of any unethical behavior in the workplace? Some of the most common unethical business behaviors are fudging work hours, making phone calls on business lines and photo copying of personal paperwork. Simple acts such as these are highly unlikely to have an employee face criminal charges but when the acts of embezzling money or falsifying business records are committed a company is more apt to prosecute. People have different views regarding what is ethical and what is unethical. Some feel that it’s

This scenario is difficult to understand. The utilitarian debate argues that the status of bringing helpful financial consequences is something that is worth obtaining (Mill, 2007). Bill Gates thereby must be permitted to attain the corporation and manage it as he deems it appropriate. Nonetheless, ethical leadership grows into all factors of management. For instance, it’s

Bed, Bath and Beyond (BBBY) currently has $400 million more in cash than they need for ongoing growth and operations requirements. While the company is financially sound analysts and investors worry about the company’s capital structure decisions. Investors do not want to see that much cash on the books and worry that the current capital structure is not the most effective for the future. They prefer that BBBY change their capital structure by paying out excess cash and issuing debt. This could allow BBBY to improve their return on equity and raise earnings per share. Given the low interest rates available it seems like the perfect time for BBBY to add debt to its capital structure. Until now they

An objective look at the different arguments given by each side of the controversial topic of whether insider trading should continue to be illegal or not. Also included is a subjective view of the author’s stance on the subject.

Written Case #1: Vera Bradley in 2014: Will the Company’s Strategy Reverse Its Downward Trend?