The Martha Stewart case (the United States v. Martha Stewart and Peter Bacanovic) Case Analysis

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24-7-custom-writing-serviceThe Martha Stewart case (the United States v. Martha Stewart and Peter Bacanovic) Case Review

The Martha Stewart case (the United States v. Martha Stewart and Peter Bacanovic) Case Study

 

 

The Martha Stewart case (the United States v. Martha Stewart and Peter Bacanovic) is one of the few criminal cases in which white collar crime was successfully prosecuted and the offender sent to jail. The circumstances that led to this case are that Martha Stewart made a personal stock trade in 2001 and later attempted to sell these shares through her stockbroker after learning through a tip that the market value for these shares had significantly fallen. The case thus involved insider trading in non-public information regarding a company’s shares with the intention of obtaining personal gain.

What actually happened is that Martha Stewart, a TV personality, and a businesswoman sold all the shares she owned in ImClone, a biotech company in which she was a shareholder (Hays, 2003). This was after she learned that the company’s shares had fallen 16 percent following the refusal by the FDA to approve one of its primary drug, Erbitux. As a result of this, she was able to avoid a loss of $45,673. The case followed an indictment of Sam Waksal, ImClone’s CEO for insider trading. At her trial, it was alleged that Martha Stewart acted on a piece of nonpublic information about ImClone’s share value. She had also acted on a tip from one Peter Bacanovic, her broker at Merrill Lynch.  The victims in the Martha Stewart insider trading case were the shareholders of the company and the public while the community involved was the criminal justice community.

Yes, I agree with what the courts did with the Stewart case. Following a protracted trial, the court finally found Martha Stewart guilty of the charges of securities fraud, obstruction of justice, and conspiracy. However, the prosecution failed to prove the charge of insider trading beyond a reasonable doubt and hence she was acquitted of this charge. To successfully prosecute and convict her of the federal offense of insider trading, the prosecution had to prove that Martha Stewart had acted upon the nonpublic information. The Securities and Exchange Commission also had to prove that Martha had a duty to refrain from trading on the nonpublic information. However, as it turned out during the trial,  the accused only acted based on the knowledge that Wakasal has sold off the shares he had in ImClone and not on the fact that the company’s share value had fallen. Because she was not a board member of ImClone, she had no duty to refrain from trading on such information. However, the court found that Martha Stewart had lied to federal investigators and conspired with her stockbroker and hence was guilty of conspiracy, obstruction of justice, and lying to investigators. Hence, the court was right in holding her liable for these crimes........................GET A PLAGIARISM FREE COPY