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Mar 10, 2004 7:03 pm


Such Ironies!



The ironies of the Martha Stewart prosecution and conviction abound. The first that comes to mind is that the Food and Drug Administration reversed its rejection of ImClone Systems' anticancer drug, Erbitux. It was the imminent rejection of the drug in 2001 that prompted ImClone CEO Samuel Waksal to try to sell his shares, word of which was passed to Stewart, perhaps prompting her to sell her shares.

Second is that although no one was victimized by Stewart's sale of the stock shares, there may be plenty of victims from her indictment, prosecution, conviction and imprisonment. Stewart sold her 4,000 shares on a day when nearly eight million other shares in that company were sold. (The previous day only about a million shares were bought and sold.) Whoever bought Stewart's shares was already in the market looking for ImClone stock and must have known that an FDA ruling was imminent. (Some investors like to gamble.) Many people seem to think that Stewart buttonholed some schnook on the street and hyped the stock in order to pressure him into buying her shares. That's not how it works.

While no one was harmed by what Stewart did, many people stand to be harmed by what the government and jury did. The jurors think that their verdict will be good for the"little people." But it is"little people" who will be hurt by the fall in the value of shares in Martha Stewart Living Omnimedia (MSLO). It is"little people" who work for MSLO and whose jobs are now in jeopardy. It is"little people" who work for KMart, the struggling retailer closely associated with Stewart. Their jobs are also in jeopardy.

According to the government, Martha Stewart lied to cover up—what? Noncriminal behavior. (It never charged her with insider trading.) Under proper law, the authorities would not have asked her why she sold her stock—she had no fiduciary responsibility to ImClone or its shareholders. The case is a travesty, for which many innocent people will suffer—not least of whom will be Martha Stewart. More here and here..

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