LABJ FORUM – Not a Good Thing

Was it bad timing, bad judgment or worse? Martha Stewart’s December 2001 sale of $200,000 worth of stock in ImClone Systems Inc., just before the Food and Drug Administration rejected the firm’s hotly anticipated cancer drug landed her in the middle of an insider trading investigation. She now faces nine counts, including securities fraud, obstruction of justice and perjury. The amounts in question pale before multi-million dollar gains made by other executives now under investigation who have yet to be indicted. So the Business Journal asks:

Do you think Martha Stewart is being treated fairly?

Richard A. Spitz

North American Leader, Global Technology Markets

Korn/Ferry International Inc.

If she’s guilty, then yes, she’s being treated fairly. But if we presume her to be innocent, then one would get the sense that this is overblown because of her celebrity. No one likes to see others get special treatment, to their advantage or disadvantage.

Paul Altman

Sage Group LLC

Senior Associate

This is a very clear example of the strong arm of the law. I’m not sure if her celebrity has exacerbated her situation or helped her. I think it’s still fair. I believe she should be indicted for it, but the magnitude of enforcement is linked to her celebrity. Whether or not that’s fair is just a fact of life. They’re doing it to set an example that people shouldn’t do insider trading.

Cynthia McClain-Hill

Managing Partner

McClain-Hill Associates

I love Martha Stewart. But if the government believes it has a case, then it’s appropriate to bring it, just as it’s even more appropriate for her to defend vigorously. It’s clear that this has attracted a high level of attention in the media because of her celebrity and because she is an incredibly driven, Type-A woman. I can’t even fold a napkin, but I do respect how she went about building her business no holds barred. I sincerely hope that she prevails. She’ll never go to jail, given what she’s been charged with. It would be wholly inappropriate and unfair. It’s not comparable to Enron or Global Crossing.

Pamela Meyer

Co-owner

Meyer Architecture

It sounds like she’s somehow being singled out because of who she is. Maybe she’s being scrutinized because she was on the board of the New York Stock Exchange. It seems like they’re really trying to make an example of her. It does seem unfair to some degree. Making an example of her won’t help insider trading. I think people will still do whatever they think they can get away with.

David S. Harrison

Partner

Spivak & Harrison LLP

I would say yes. It’s not certain anything will happen to her, despite the fact that government has a strong incentive to restore investor confidence after Enron and these analyst cases. The bottom line is, if you can’t prosecute her, who can you prosecute? What’s interesting is that she’s being indicted with her broker from Merrill Lynch, Peter Bacanovic, so it’s more than insider trading. It’s a conspiracy, a scheme to cover it up. I think the incentive was money.

Linda Speitzman

Owner

THAT New Network

I believe she has been treated fairly. If she’s found guilty, she should get the same punishment as any other person. It should be genderless.