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Case Study: the Trial of Martha Stewart

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Case Study: The Trial of Martha Stewart
The United States of America is one of the few western countries which has no clear definitions for “insider”, “insider information”, and “insider trading” in its law system. Therefore, people are sending to prisons for a crime that has not defined yet. It is part of a due process that people have notice of what they are doing is wrong. Martha Stewart was sent to prison, because she sold her ImClone shares as a result of receiving tip from her broker on December 27, 2001. Bacanovic, Stewart’s broker, had routine access to the material, non-public information inside of ImClone which made him an insider. The argument here is whether Martha Stewart is an insider or not? Is receiving a tip makes her an insider? The same way, Sam Waksal, the CEO of ImClone, tipped his family members, an investment advisor, and a physician to sell their shares. However, none of the tippees was convicted with the insider trading crime, except for Martha Stewart. Martha Stewart was not holding any position in ImClone, nor had any routine access to the ImClone’s material, non-public information. Thus, how can she be possibly considered as an insider? It is very brutal to be convicted of a crime which has not been clearly defined in the law system, yet.
The criticism here was that Martha Stewart was being used as a scapegoat, a victim. She could easily serve as an example of a high visibility celebrity who committed the insider trading crime. Also, it could be a credit for the United States Justice System in which everybody was being treated equally. She was a successful business woman, an entrepreneur, and a TV personality who was competing in men’s world. This was a very unusual phenomenon. In some other critics’ point of view, her trial was a complete circus and so mishandled. It was just used for publicity purposes. Obviously, she was a victim of…...

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