Stock Trading Case and Conviction
According to U.S. Securities and Exchange Commission (SEC), Stewart avoided a loss of $45,673 by selling all 3,928 shares of her ImClone Systems stock on December 27, 2001, after receiving material, nonpublic information from Peter Bacanovic, who was Stewart's broker at Merrill Lynch. The day following her sale, the stock value fell 16%.
In the months that followed, Stewart drew heavy media scrutiny, including a Newsweek cover headlined "Martha's Mess". Notably, on June 25, 2002, CBS anchor Jane Clayson grilled Stewart on the air about ImClone during her regular segment on The Early Show. Stewart continued chopping cabbage and famously quipped, "I just want to focus on my salad". On October 3, 2002, Stewart resigned her position, held for four months, on the board of directors of the New York Stock Exchange, following a deal prosecutors had made with Douglas Faneuil, an assistant to Bacanovic.
On June 4, 2003, Stewart was indicted by the government on nine counts, including charges of securities fraud and obstruction of justice. Stewart voluntarily stepped down as CEO and Chairwoman of MSLO, but stayed on as chief creative officer. She went on trial in January 2004. Prosecutors showed that Bacanovic had ordered his assistant to tell Stewart that the CEO of ImClone, Samuel D. Waksal, was selling all his shares in advance of an adverse Food and Drug Administration ruling. The FDA action was expected to cause ImClone shares to decline. After a highly publicized five-week jury trial that was the most closely watched of a wave of corporate fraud trials, Stewart was found guilty in March 2004 of conspiracy, obstruction of an agency proceeding, and making false statements to federal investigators, and was sentenced in July 2004 to serve a five-month term in a federal correctional facility and a two-year period of supervised release (to include five months of electronic monitoring).
Bacanovic and Waksal were also convicted of federal charges and sentenced to prison terms. Stewart also paid a fine of $30,000.
In August 2006, the SEC announced that it had agreed to settle the related civil case against Stewart. Under the settlement, Stewart agreed to disgorge $58,062 (including interest from the losses she avoided), as well as a civil penalty of three times the loss avoided, or $137,019. She also agreed to a five-year ban from serving as a director, CEO, CFO, or any other officer role responsible for preparing, auditing, or disclosing financial results of any public company. In June 2008, the UK Border Agency refused to grant her a visa to enter the United Kingdom because of her criminal conviction for obstructing justice. She had been planning to speak at the Royal Academy on fashion and leisure industry matters.
Read more about this topic: Marthastewart
Famous quotes containing the words stock, trading, case and/or conviction:
“After supper she got out her book and learned me about Moses and the Bulrushers; and I was in a sweat to find out all about him; but by and by she let it out that Moses had been dead a considerable long time; so then I didn’t care no more about him; because I don’t take no stock in dead people.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)
“His farm was “grounds,” and not a farm at all;
His house among the local sheds and shanties
Rose like a factor’s at a trading station.”
—Robert Frost (1874–1963)
“If someone does something we disapprove of, we regard him as bad if we believe we can deter him from persisting in his conduct, but we regard him as mad if we believe we cannot. In either case, the crucial issue is our control of the other: the more we lose control over him, and the more he assumes control over himself, the more, in case of conflict, we are likely to consider him mad rather than just bad.”
—Thomas Szasz (b. 1920)
“I remember my youth and the feeling that will never come back any more—the feeling that I could last for ever, outlast the sea, the earth, and all men; the deceitful feeling that lures us on to joys, to perils, to love, to vain effort—to death; the triumphant conviction of strength, the heat of life in the handful of dust, the glow in the heart that with every year grows dim, grows cold, grows small, and expires—and expires, too soon, too soon—before life itself.”
—Joseph Conrad (1857–1924)