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The Martha Stewart Scandal and Trial

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Part I
What reasons could Martha Stewart have had to:

1. Act upon the stock tip she receive by selling all her stock
2. Then lying to Federal Agents about it

Part II

What were the negative consequences of her actions?

1. How did it affect her business empire?
2. How did it affect her personal life?
3. In what other ways did it affect her?

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Solution Summary

Referring to the Martha Stewart, ImClone Stock Scandal and trial and decision-making, this solution investigates the potential reasons Martha Stewart had to act upon the stock tip she receive by selling all her stock and then lying to Federal Agents about it. What made her do it? It then discusses the negative consequences of her actions e.g. the effects on her business, personal life and other ways it might have affected her.

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Hi,

Excellent questions!

RESPONSE:

Part I
What reasons could Martha Stewart have had to:

1. Act upon the stock tip she receive by selling all her stock
2. Then lying to Federal Agents about it.

Briefly, in June of 2002 Martha was involved in an insider trading scandal unrelated to her own company: she sold her shares of stock in the drug company ImClone one day before an FDA decision caused the stock to drop, and after she had been given insider information by broker Peter Bacanovic (http://www.answers.com/topic/martha-stewart).

Martha's main motives or reason to act upon the stock tip she receive by selling all her stock was probably purely financial. Other reasons that have been given is that she always took the advice of her adviser and did not know it was illegal. However, this is unquestionable, because why then did she lie to the authorities. ...

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