Martha Stewart Fraud Case Introduction Martha Stewart is an American writer, business magnate, former fashion model and popular television. She gained huge success through the variety of several business ventures as the founder of the Martha Stewart Living Omni media. Her variety of business ventures include broadcasting, publishing, electronic commerce and merchandising. She became one of the popular business entrepreneurs through her written electronic commerce books and magazines. Martha Stewart convicted of several legal charges, such as ImClone insider trading affair in the year 2004. The essay will assess the Martha Stewart fraud case and codes of ethics associated with the case.
Discussion The lucrative career of Martha Stewart includes caterer, business owner, home living expert and stockbroker. Martha Stewart Living Omni media can be considered as her success story which has turned from a catering business to a popular and well-recognized brand. According to an author, “To the degree that her business partners were prepared to help advance the success of Martha Stewart, she was prepared to work with them. To the degree that they got in her way, she was willing to roll right over them” (Daniels Ethics1 2).
Peter Bacanovic was the stock broker of Martha Stewart. She along with her stock broker has been indicated for “making false statements and conspiracy to obstruct justice” (Reynolds 1). The Insider trading scandal threatened the career of Martha Stewart’s career. The scandal took place due to the association with the ImClone System. It is a biopharmaceutical company. Martha Stewart owned the stock of this company. However, the FDA refused to review the cancer drug Erbitux of ImClone system. It tumbled the stocks of the company.
However, same thing occurred with the insiders of ImClone. Martha Stewart was the potential stock owner. She was one of the closest friends of CEO of the ImClone. However, she gave instruction to his broker to transfer the money invested in stock to the bank account of his daughter. Peter Bacanovic was also the broker of the CEO of ImClone, Mr. Sam Waksal. However, his daughter also has requested the broker to sell her stock capital. The CEO of ImClone was arrested due to obstruction of justice, bank fraud and insider trading.
He was sentenced to seven years of jail. However, he got released after the five years of jail ter. He stated in his appeal that “I am aware that my conduct, while I was in Profession of material non-public information, was wrong, I’ve made some terrible mistakes and I deeply regret what has happened” (Daniels Ethics2 3). However, Martha Stewart stated that it was not her fault and she was innocent. However, during the investigation of her personal e-mails and phone calls it has been cleared that she failed to prove her points and statements.
Against the investigation, she was sentenced to five months jail. Event today also she used to state that she is innocent. Assistant of Martha Stewart has left a message to Sam Waksal “Something’s going on with ImClone, and she wants to know what it is. She’s staying at Los Ventanos” (Daniels Ethics3 3) However, the CEO of ImClone did not reply her back. Despite these evident Martha Stewart failed to prove other points and statements made by her. However, it can be stated regarding the case analysis that insider trading can be considered as one of the major business crimes.
It is important for an organization to maintain sustainability and code of ethics in the business operation processes in order to maintain effective re3lationship with several important external and internal stakeholders. It is true that FDA refused to review the drugs that had been developed by ImClone. However, it was the responsibility of Martha Stewart to inform the Food and Drug Administration about the issue of Inter Trading Scandal.
However, it affected the image of Martha Stewart in global market place. In addition to this, demand for her several business ventures reduced among the stakeholders. In addition to this, she should have asked her broker what is going wrong in the ImClone’s stock. It affected the entire personality image of Stewart. Conclusion It is clear from above discussion that Martha Stewart was sentenced to jail for five maths after the investigation due to conspiracy to obstruct justice and making false statement. These false statements also have amounted to the securities fraud.
It affected her image. She can be considered as one of the leading business women in US. But, this issue of obstructing codes of ethics in business affected the performance of her other business ventures also. Works Cited Daniels Ethics 1. Martha Stewart’s Insider Trading Scandal. Daniels Fund Ethics Initiative University of New Mexico. 2012. Web. 28 Jan. 2014. http: //danielsethics. mgt. unm. edu/pdf/Martha%20Stewart%20Case. pdf. Daniels Ethics 2. Martha Stewart’s Insider Trading Scandal. Daniels Fund Ethics Initiative University of New Mexico. 2012. Web. 28 Jan. 2014. http: //danielsethics. mgt. unm. edu/pdf/Martha%20Stewart%20Case. pdf. Daniels Ethics 3. Martha Stewart’s Insider Trading Scandal.
Daniels Fund Ethics Initiative University of New Mexico. 2012. Web. 28 Jan. 2014. http: //danielsethics. mgt. unm. edu/pdf/Martha%20Stewart%20Case. pdf. Reynolds, Alan. Martha Stewart: Obstructing Injustice. CATO Institute. 28 July. 2003. Web. 28 Jan. 2014. < http: //www. cato. org/publications/commentary/martha-stewart-obstructing-injustice>.
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