Martha Stewart prison-perjury and Sarbanes Oxley

Home >Sarbanes Oxley >

Martha Stewart was convicted on the charges of obstructing investigators and lying to them about a well timed stock sale. This stock sale occurred after her broker Peter Bacanovic alerted Stewart to sell Imclone stock. This was told at the trialby Dougas Faneuill,Bacanovic's former assistant.

Douglas Faneuil testified that his boss ordered him to pass the inside tip about ImClone to Stewart, after Bacanovic knew that the ImClone founder Sam Waksal was trying to sell stock. The Imclone stock price dropped the next day after approval of a new drug was denied by the US drug regulators. Ex-ImClone CEO Waksal was sentenced to more than seven years in prison, ordered to pay $4.3 million, for his role in the insider trading scandal.

Would Martha Stewart be prosecuted under the Sarbanes Oxley act?

The answer is no. Sarbanes Oxley is mainly concerned with the duties and actions of company's employees, and duties of different office holders as well as Analysts and investment professionals. In Martha's case she was investigated for an alleged inside trade of Imclone stock after being tipped off by her stockbroker.Martha Stewart's shares in Imclone had no connection to her publicly traded company, Martha Stewart Living. If she sold Martha Stewart Lining stocks after knowing insider knowledge she could be prosecuted.

Should Martha Stewart have been put in prison for longer?

Stewart servedfive months in prison, the minimum the judge could impose under federal sentencing guidelines. She also received a$30,000 fine, five months of home confinement and two years of supervised probation after her release. The judge could have sentenced her for longer. Others believe that the sentence was unjust, including Martha at the time who said after her sentence, 'I take comfort in knowing that I have done nothing wrong '. Martha has been appealing against her conviction.

When in prison Martha, spent her time inventing new Microwave recipes.

Is Martha in the same league as; Dennis Kozlowski or Mark Swartz of Tyco or Bernard Ebbers, WorldCom CEO, Jeff Skilling, Ex-Enron CEO, John Rusnack of AIB or Nick Leeson of Barings Bank.

Martha's case is nothing like them. The others caused financial mayhem, unlike Martha who saved $51,000, by selling the Imclone shares a day before the price dropped. It did seem a bit zealous by the authorities pursuing Martha so much at the time, but it was coloured by the background hueof corporate scandals in the USA.

Tyco was charged looting $600 million.

John Rigas and his sons are charged with stealing millions from Adelphia.

Enron and WorldCom led to billions of dollars in losses for investors along with thousands of job losses.

Nick Leeson covered up accounts and lost a Billion, bringing down Barings bank.

Go back to the ..
Sarbanes Oxley
section page.

- -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

To return to the main index press home at the bottom of the page.

-

Home Page