Martha Stewart's Case: The Imclone System Inc.

1956 Words 8 Pages
Martha Stewart’s case surrounded her sale of 3,928 shares in ImClone System Inc. The case aims at determining whether Martha Stewart lied to investigators and her company’s investigators about it. On Dec. 27, 2001, Stewart cashed out her ImClone stake at an average price of $58.43, collecting about $229,500 (U.S. Securities and Exchange Commission, 2003). After the market closed the following day, the Food and Drug Administration announced its refusal to review ImClone's application for Erbitux, a promising cancer drug. The next trading day, Dec. 31, ImClone's shares opened at $45.39 per share. That difference in price would have cost Stewart about $51,200 if she sold first thing that morning. ImClone’s shares dipped below $10 in mid 2002n, …show more content…
Stewart as going out of her way to conceal the circumstances of the sale of nearly 4,000 shares of ImClone Systems. A separate civil complaint from the Securities and Exchange Commission accused her of insider trading, based on information she is said to have received from Douglas Faneuil, assistant to the stockbroker, Peter Bacanovic. The S.E.C. contended that Ms. Stewart should have known she was receiving illegal information when Mr. Faneuil told her the Waksals were selling their ImClone shares. It is seeking to have her barred from serving as a director of any public company, including her own, and to limit any executive role in a company. A third statement on June 18, made after the stock market closed, also repeated her contention that the $60-a-share price floor influenced her decision to part with her ImClone shares. ''On June 18, 2002, MSLO stock closed at $14.40,'' the indictment said. ''On June 19, 2002, the first day of trading after Stewart issued the June 18 statement, MSLO stock closed at $16.45, representing an increase of approximately 14 percent (Washington Press, 2004).'' Laura Richardson, an analyst with Adams, Harkness & Hill in Boston, said the removal of Ms. Stewart indicated the beginning of a turnaround. ''It shows some seriousness about improving the business fundamentals,'' she …show more content…
The charges are what the government issues to begin the criminal process
Martha Stewart and Peter Bacanov are faced with several charges in the original indictment. The charges include that of Conspiracy. This charge is filed by the government against both Martha Stewart and Bacanovic. The government alleges that both Stewart and Bacanovic willfully and knowingly worked together to make false statements in the stock-trading scandal. Stewart lied when she told the Securities and Exchange Commission, the FBI and federal prosecutors she had prearranged with Bacanovic to sell ImClone when it fell well below $60 per share.
The second count against Martha Stewart is that of conspiracy. This was filed against Stewart and Bacanovic. The charge alleges that Stewart and Bacanovic willfully and knowingly worked together to obstruct justice and make false statements in the stock trading scandal (Leite, 2012).
The third charge against Stewart is that of false statements. Martha Stewart among other things lied when she told the SEC, the FBI and prosecutors that she did not recall being told on Dec. 27, 2001, that the family of ImClone Systems founder Sam Waksal was selling

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