ImClone Case: Insider Trading
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In the ImClone case, Martha Stewart was convicted of lying to investigators (obstruction of justice and perjury) and also charged with securities fraud for selling stock of a company called ImClone.
Based on your understanding of the ImClone case, answer the following questions:
•Why did this case come to the attention of the SEC?
•What were the specific crimes involved in this case?
•Should Stewart have been prosecuted? Why or why not?
•Did being famous make things better or worse for her?
Based on your study on stock answer the following questions:
•What are some of the factors that can make the price of a company's stock increase or decrease?
•Do you own any stock? If yes, then what were the factors that influenced your decision to buy shares in a particular company? If not, what factors would you consider when buying shares? Note: You do not have to reveal which shares you own or any other personal information.
•Should the executives of a publicly traded company be required to report their stock transactions? Why or why not?
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Solution Summary
This solution explains ImClone Case and insider trading. The sources used are also included in the solution.
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Step 1
The case came to the attention of SEC because the CEO of ImClone, Sam Waksal asked his friends and family to sell their stock of the company. He also attempted to sell his own stock. His daughter sold $8.1 million in shares one day before it was announced that the company's monoclonal antibody had not got the approval of FDA. His father and executives all sold their stocks before the news was announced by the company. This was a serious securities fraud and this attracted the attention of SEC.
The specific crimes involved in this case were insider trading. Martha Stewart had obtained an unlawful tip from her stockbroker Bacanovic. Stewart and Bacanovic created an alibi for Stewart's sales and were also convicted of making false statements concerning Stewart's Imclone trades.
Stewart should ...
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