Case: The Trial of Martha Stewart

Martha Stewart started her career in 1976. In ten years her business, which she

ran out of the small of her business, had become a $1 million enterprise. She is into a

one-woman industry. She is a popular American television and magazine personality

know for her cooking, gardening, etiquette, and arts and crafts projects, and as a general

lifestyle guide and homemaker. Over the year, Martha Stewart has show patience and

good humor in the face of the criticism and satire. However, she was confronted with a

far greater challenge in 2003, an investigation of her personal stock trading by the Justice

Department and the Securities Exchange Commission. Starting in 2002 her career was

rocked by a scandal involving her sale of shares in a drug company days before its

application for a new drug was denied. She was eventually convicted of lying to

investigators and sentenced to prison in 2004.

The government says Stewart has been involved the crime of insider trading. She

saved the money by selling stock in ImClone Systems on Dec. 27, 2001. It was just

before a negative government report about rejecting the Erbitux (new colon cancer drug)

application. It was insider information because it was not yet known to the public.

Although Stewart says she sold because she and Bacanovic, her Merrill Lynch & Co.

broker, had a pre-existing agreement to sell when the stock fell to $60, the government

still says she was tipped that ImClone founder Sam Waksal who were close friend had

been introduced by Stewart’s daughter Alexis was trying to unload his shares.

The U.S. Attorneys and the Securities and Exchange Commission indicting

Martha Stewart sold ImClone after a “secret tip” from Bacanovic that the Waksals were
selling. Then, she and Bacanovic tried to cover it up. The two were charged with

conspiring to conceal evidence that Bacanovic had provided nonpublic information about

ImClone to Stewart. And they were accused of lying to government attorneys to hamper

their investigation. Moreover, Under questioning by attorney, Faneuil who was on duty

at the mid-Manhattan office of Merrill Lynch during Martha Stewart sold her shares, he

indicated that Bacanovic asked him to break the client information privacy policy, then

let Faneuil, who told Martha Stewart that Sam Waksal and his daughter had sold all of

their shares. Merrill Lynch protects the confidentiality and security of client information.

Employees may not discuss the business affairs of any client with any other employee.

However, Bacanovic told Martha Stewart a big tip for the shares sold. Therefore,

prosecutors are unconsciously to indict Marthan Stewart base on evidence of a serous

crime in this case. Martha Stewart was charged with securities fraud. She had made a

series of false statements about her innocence to mislead investors and prop up her

company’s share price.

I agree with the jury that she was guilty beyond a reasonable doubt of the

conspiracy and obstruction of justice charges. The jury deliberated for 14 hours over

three days. On March 5 the verdicts were announced that Stewart and Bacanovic were

each found guilty on four counts of lying and conspiring to lie to conceal the fact that she

had been tipped with insider information. However, the jury disagree that the

government had proved beyond a reasonable doubt it allegation that Stewart and

Bacanovic fabricated the $60 sale agreement and it acquitted them on those counts.

Stewart was not indicted on the original charge of insider trading, but only for the

coverup that ensued, it is because she had a standing order with Bacanovic to sell her
shares if ImClone stock fell below $60. In addition, jurors also found Faneuil credible

and gave much weight to his testimony. Ann Armstrong was also an important witness

because she cried and they felt cynical about Stewart hiring a criminal defense lawyer

even before she was contacted by government investigators.

Martha Stewart and Peter Bacanovic were sentenced appropriate that each

sentenced to five months in prison, five months of home confinement, and two years

probation, for lying about a stock sale, conspiracy and obstruction of justice. Stewart was

ordered to pay a $30,000 fine, while Bacanovic was fined $4,000. Furthermore, Faneuil

cut a deal with prosecutors, in which he pleaded guilty to one misdemeanor count in

exchange for his testimony. Though he entered his plea in October, his sentencing is not

slated until June. Faneuil at length about the specifics of his agreement with the

government, focusing on the fact that prosecutors agreed to send a letter to the judge

sentencing him after his testimony is complete. Without such a letter from prosecutors,

the judge would have little flexibility to give Faneuil a sentence without jail time.

Eventually, from indictment to sentencing, the case of Martha Stewart was a

matter of intense public interest. Some thought that Martha Stewart has had more

influence on how Americans, eat, entertain, and decorate their homes and gardens than

any one person in our history. Her story is miraculous.

In conclusion, Truth is attainable in business and many accomplish it through

honesty and integrity. Unfortunately, there are many commit fraud in the business world.

It is important that everyone should know business ethics that is the study of good and

evil, right and wrong, and just and unjust actions in business. A mass of principles,
values, norms and thoughts concerned with what conduct ought to be exists to guide

them. In this case, if Martha Stewart were perhaps better trained in the field of ethics, she

may have never suffered the terrible trial like this.