Martha Stewart Insider Trading: Case Study Essay

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Martha Stewart Insider Trading: Case Analysis Report Part I: The Case 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. Martha Stewart may be America's most famous businesswoman. Considered a "cultural icon" (Byron, 3), she made a name for herself through…show more content…
As Christmastime closed in, Bacanovic and Stewart met to review her portfolio. While Martha insisted that she hold her shares of ImClone, Bacanovic urged her to sell. Allegedly, they finally determined that if the stock fell to $60, she would at that point sell her shares (Crawford, 2). However, authorities later determined that the particular agreement never took place. A Day of Infamy On the morning of December 27th, 2001, the day before the FDA would make their announcement concerning Erbitux, Sam Waksal and another member of his family called Doug Feneuil to insist that he sell his ImClone shares. He then made the call to Peter Bacanovic, warning him that Sam Waksal was dumping his $7.3 million in ImClone shares. Within minutes of the call, Bacanovic went through desperate measures to reach Martha Stewart. However, Martha was onboard her private plane headed toward Cabo San Lucas, Mexico, so he contacted the next best person, Martha's secretary Ann Armstrong (Slater, 25). With Ann, he left possibly the most infamous 10 words of the entire case: "Peter Bacanovic thinks ImClone is going to start trading downward" (Slater 25). Officials later concluded that Stewart actually changed the wording in her phone log from "Peter Bacanovic thinks ImClone is going to start trading downward," to "Peter Bacanovic re Imclone [sic]", and then

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