July 2, 2020 in Description
Martha Stewart
  1. Whether Martha Stewart Committed the Crime of Insider Trading 

Insider trading refers to a crime in a business where an individual or a director of a company trades in the shares of the company using information which is not public in nature as bestowed by the shareholders of the company. Such act is a contravention of the law in the United States of America and is considered a felony. It may seem that Martha Stewart committed the crime of Insider trading when she decided to sell her shares owned at the Imclone Company, a biopharmaceutical company in the United States of America, which was valued at more than $ 200, 000. From the sale, Martha Stewart was able to receive $ 40,000 as part of her savings. I have a strong conviction that the deception by Bocanovic is what put Martha Stewart into the agony of facing charges for Insider trading. After a proposal was submitted to the Foods and Drugs Administration department of the US for approval, the administration rejected on safety grounds. It was likely that the company’s stock was on its way to falling since the reputation of the company would be tainted upon the official announcement of the decision by the Foods and Administration Department. After noting the consequence, one of the doctors relayed the information to the relatives and friends, upon which Martha Stewart received information, and on its strength sold her shares something that was deemed Fraudulent against the company and the public. To the extent that Martha Stewart sold her stock basing on the advice of a broker when the information was not yet published by the Foods and Drugs Administration, she was accused of Insider trading. The method of information reception matters a lot in Insider trading, since there must be an insider within the company relaying the information which in this case, there was no such person and therefore on this basis, she is not guilty.

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  1. Whether the Securities and Exchange Commission and the United States Attorneys used good judgment in indicting Martha Stewart

The evidence used by the US attorneys and the Securities and Exchange Commission makes it clear that the prosecution of Martha Stewart who is a public figure, was done in bad faith. Their intention was to taint her name and therefore, it can be said that they acted on bad judgment. First, the counts upon which Martha Stewart was convicted, were not the initial counts she was to face. At first, the authorities pursued Stewart for indictment on the crime of insider trading, which turned out that in fact there was no evidence to sustain the charge as there was no insider from the company amidst all the allegations. Secondly, it was wrong for the authorities to assume that Stewart sold her stock on the basis that she was acting on the strength of the information that the company’s stock was likely to fall due to the disapproval of the drug by the Foods and Drugs Administration. The company was already falling before such kind of announcement. The fall was mainly attributed to rumors by the public as opposed to information from an insider in the company. Lastly, the count of perjury, two counts of false statements, and one count of perjury was arrived at through the manipulation of Stewart and the statements from her co-accused which were all wrong and misguided.  The truth is, when Martha Stewart discovered the fall of the company, she held a meeting with several directors of the company and entered into an agreement for the sale of the shares way before the FDA rumors. To conclude, basing on the fact that the US attorneys relied much on Stewart’s previous sentence of Insider trading, when in fact, the securities and exchange commission had made an erroneous judgment was unfair. The counts of conspiracy, misleading investigators, misleading stockbrokers and obstructing justice were all but an unfair trial to Stewart.  It is outright that the indictment was based on evidence of a non-serious offense and thus the prosecution, had their ill motive in the trial. 

  1. Whether Martha Stewart was guilty of conspiracy and obstruction of Justice beyond reasonable doubt  

I strongly believe that the whole trial about conspiracy and obstruction of justice was a mistrial on the part of Martha Stewart, and it cannot, therefore, be said that that the prosecution sufficiently proved their case to warrant a conviction. Putting into consideration the inability of the prosecutors to pursue a case of insider trading due to lack of proper evidence, the whole other charges as framed lacked a basis. It would be so absurd for the prosecution which conspired to convict Stewart, to say they had sufficient proof.  At first, the two charges arose from the mere fact that Martha Stewart decided to talk to the government investigators whom she had a right not to say anything. While Stewart was so honest about her in the insider trading case, the investigators were quick to use her honesty against her. It is clearly evident that until Martha Stewart opened her mouth to talk to the investigators, she had broken no law capable of an indictment and that explains why the police dropped the insider trading charges. The core matter of the case was insider trading, and all the other charges of obstruction of justice and conspiracy were based on it. When the case broke up, it was only fair that the prosecution could not proceed with any further charges.  Why would the court reach a decision that Martha Stewart had obstructed justice when in the first place, she had not committed any offense. The conviction was entered on the strength of the statements by Martha Stewart towards the government investigators, which did not in any way reveal an offense of insider trading, but since there was a slight deviation in the statements between of Martha and the stockbrokers, she was found guilty. To this extent, it’s my opinion that the case was never proven beyond reasonable doubts, and thus an acquittal could have been necessary of all the two counts.

  1. Whether the punishments against Martha Stewart, Bocanovic and Faneuil were indeed proper 

In my opinion, imprisonment of Martha Stewart was very unfair as she was serving a punishment over an accusation she was never aware. It is very improper for someone who was acting on the relayed by a stockbroker to undergo such pain when she tried all the best to explain to the government investigators nothing but the truth of what happened.  If indeed Martha Stewart could have been guilty, then the five months imprisonment could have been satisfactory due to the tainting of her reputation and the disruption of her business.     While both Stewart and Bocanovic, the stockbroker were given the same sentences, the punishment is fairer to Bocanovic because he was guilty and he is the source of Martha Stewart’s predicament. While other people may argue than five months imprisonment is a very light sentence for the two; it should be noted that both of them are first offenders, and it was clear that they were only acting out of lack of knowledge. In my opinion, therefore, I believe that Stewart could have been acquitted or given an out of prison sentence. For Bocanovic the five months were proper. The $ 2,000 fine as a punishment for Douglas Faneuil was also proper because he chose to avoid the serious consequences of perjury and conspiracy by pleading guilty to a small charge of receiving money to conceal information. The main culprit in the whole saga was Bocanovic. Martha Stewart, therefore, suffered the burden of Faneuil and Bocanovic.


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