Can someone give me the "dummies" version of what Martha did wrong?

Her mistake was not just saying, "Hey, I was a dumb-azz and I had no clue about what I was doing. I'm very wealthy and I have to make decisions all the time. One of my brokers called and I said, 'Sure. Sell the stock. Whatever.' I still don't understand what's happening!".

She lied to cover it up. That was her big mistake... much worse than what she ended up being charged with. That's the way I understand it.


The same thing happened to Nixon. More trouble for the coverup than the deed itself.

 

Sicne she wasn't charged criminally with insider trading, obviously the cover-up was the problem.

 

I haven't followed the case and don't know exactly what she did, but I can explain insider trading.

In a nutshell, it is illegal to buy or sell stock upon learning knowledge that is not public knowledge. For example, learning of a merger before it becomes public knowledge and buying stock due to it will land you a nice long stay in jail if they can prove you knew about what was going to happen before it did.

 

Tried to compete in a man's world.


(~violin begins playing in the background~)

 

I know very little about this case, since I havent been following market news the past 2 years. From what i know she dumped some shares of stock within a day/hours that it was released that that particular company was not going to get a drug approved by the FDA. This rejection by the FDA would cause the stock to plummet the next trading day. Supposedly she got the info from an insider which is illegal.

Hopefully someone that knows what they are talking about, as a opposed to me, will post are decent business analysis of what she did.

 

She did the same thing Bill Clinton did....she lied under oath.

DD

 

I dont think that that defense would have worked. She is a very intellegent investor.

 

She received word about a negative government report about one of ImClone's drugs. This information had not been made public yet. 4,000 shares of the stock were sold in the immediate aftermath.

In the aftermath, phone logs were changed and the story given to the FBI and SEC by Stewart was thought to be false. Her broker's records also appeared to have been changed (He was also charged). So she was charged with obstruction, making false statements and conspiracy.

 

Thanks, was wondering what had happened with the insider bit. From what i can recall about this, wasnt the amount of stock traded rather small? Like 250K or so? It would suck to get busted for a nominal amout but insider trading is all the same.

Maby Trader Jorge could shed some light on this since he is in that feild.

 

Funny thing is if she would have just sat on all of that stock she wouldn't be in trouble and would have made a ton of money.

ImClone stock soars on drug approval
Saturday, February 14, 2004

NEW YORK -- Shares of ImClone Systems Inc. soared nearly 29 percent Friday on news that the company’s colorectal cancer drug Erbitux had won regulatory approval.

http://www.detnews.com/2004/business/0402/15/business-63809.htm

 

An female intern performed oral sex on Martha? Oh, Martha! Her stock just went up about 1000 percent in my eyes.

 

Well, whatever strategy her legal team used didn't work. Maybe she's just guilty and for once wealth didn't save her. More often than not, it does. Isn't Kenneth Lay still out of jail?

 

When you commit obvious, easy-to-understand crimes, it's a lot easier to prosecute you.

When your crimes are complicated and boring and harder to prove, it takes more planning by the prosecution. Last thing the prosecution wants to do is start a case too soon and lose.

Plus, who's to say that Stewart will end up doing any time. She may, but it's entirely possible she won't.

 

Then Martha created a cigar box for her using nothing but shredded shares of stock.

 

She made the mistake of acting like every other asshat CEO, without the luxury of having a penis and testes.

 

She learned information that the government was not going to report favorably about an ImClone product (she owned stock in ImClone). Knowing that that info would make her stock drop in value, she sold it (based on this non-public information).

That's illegal and will get you put in jail (it's not fair to other shareholders of ImClone that you get the non-public info and they don't). These charges against Martha were dropped because the judge said there wasn't enough hard evidence to go to trial.

However, when the government investigated (Securities Exchange Commission) her transaction, Martha and her broker and her assistant lied to the feds, trying to cover her tracks. There WAS evidence of this, and she was found guilty on all four counts.

Many say that the SEC was just making an example of her and that it happens every day by lots of people who get away with it. That's very true, but it doesn't make it right. I'd rather see the SEC try busting people, than to see 'em not bust anybody.

Martha's lucky they threw out the insider-trading charge. Or maybe I shouldn't call it luck. That charge alone was by far the worst. I find it suspicious that there wasn't enough evidence to even try her for that charge, but there was enough evidence to try and convict her for the four other charges.

-- droxford

 

Actually there was no evidence that she knew there was a negative government report, she only learned from her broker that her friend Sam was selling a lot of ImClone stock.

The insider trading charge in this case is minor at best. It was when she denied any wrong doing during the investigation that the feds didn't like, and went after her on obstruction of justice.

Had she said nothing, there wouldn't be this much trouble.

 

Of course, the other two people charged in this case were men. The ImClone guy himself (who did not implicate Stewart, apparently) and Stewart's broker.