Martha stewart's insider trading case: a practical application of rule 21 the georgetown journal of legal ethics, 20(3), 707-718 rawls, kevin l, (2009) martha stewart and insider tradingfaculty publications and presentations. Join us this january for wisdom of the ages on today's economic crisis, a new six-week course on jewish business ethics from the rohr jewish learning institute. Martha stewart was accused of insider trading after she sold four thousand imclone shares one day before that firm's stock price plummeted although the charges of securities fraud were. Eth 501 module 1 case assignment the martha stewart insider trading case was a high profile case filled with uncertainty in order to say whether or not stewart handled her indictment responsibly, it is necessary to start with an assumption regarding her guilt or innocence. The ethics behind martha stewart and the insider trading scandal pages 3 words 1,829 view full essay insider training, the case of martha stewart, business world.
The organization ethics of insider trading on december 27, 2001, martha stewart made a decision that changed her life, and the decision jeopardized the livelihood of her stakeholders ms ms stewart received a call from her stockbroker's assistant letting her know that dr samuel waksal was trying to sell his holdings in imclone. Sec charges martha stewart, broker peter bacanovic with illegal insider trading for immediate release 2003-69 washington, dc, june 4, 2003-- the securities and exchange commission today filed securities fraud charges against martha stewart and her former stockbroker, peter bacanovic. Martha stewart: america's favorite home-maker martha stewart became a convicted felon as a result of insider trading, sentenced to five months imprisonment, and a further five months house arrest.
When most people hear the term insider trading, they think of the crime but by its most basic definition, insider trading is the trading of a public company's stock or other securities by individuals with access to nonpublic, or insider, information about the company. Insider trading is one of those phrases that most adults have heard (at least on the nightly news), but that relatively few understand (perhaps the most famous case: martha stewart was originally charged with insider trading in the imclone case) i imagine few people even know what it really. In december 2001, martha stewart sold less than 4,000 shares of imclone stock the day before the announcement of bad news, enabling her to avoid approximately $40,000 in trading losses the popular press has pilloried stewart late night comedians have all but branded her a crook. Abstract insider trading mostly occurs by individuals close to the upper level management of an organization this type of unethical behavior undermines the stability of the organization.
A us securities and exchange commission and us attorney probe of trading in the shares of imclone systems resulted in a widely publicized criminal case, which resulted in prison terms for media celebrity martha stewart, imclone chief executive officer samuel d waksal and stewart's broker at merrill lynch, peter bacanovic. Martha stewart was indicted yesterday on charges of conspiracy, obstruction of justice and securities fraud, all linked to a personal stock trade she made in 2001. Insider trading allegations includes shareholders 12 pope john xxxiii ethical theory about human relationships within organization martha stewart was. In relation to the case of martha stewart, insider trading was clearly evident in martha stewart's instance martha had been a shareholder of the biopharmaceutical company imclone system incorporated.
Martha stewart was offered non-public information material to the price of a stock, and she traded on it, in contravention of securities law m, which holds that it is unfair to trade on such information. A year ago, it was easy to accuse martha stewart of insider trading through anonymous press leaks it would be much more difficult to prove such charges to a jury.
It is filed under news & features and tagged with doj, fraud, imclone, insider trading, justice department, martha stewart, sec you can follow any responses to this entry through the rss 20 feed comments are closed. This paper reviews the literature on insider trading and applies utilitarian ethics and rights theory to some recent case studies of insider trading in an attempt to determine which forms of insider trading are ethically acceptable. Martha stewart found out about the news when bacanovic's assistant, douglas faneuil, notified her that dr waksal was selling his holdings (hurtado, 2004) each person who sold their holding in imclone on december 27, 2001 with knowledge of the possible decline participated in insider trading. Surprising many court-watchers, martha stewart was convicted friday on all four outstanding counts relating to her insider-trading sale of imclone stock.