Posted on 06/04/2003 4:50:46 PM PDT by RoughDobermann
Edited on 04/29/2004 2:02:38 AM PDT by Jim Robinson. [history]
NEWS ALERT Martha Stewart resigns as CEO of her company after indictment on obstruction of justice and securities fraud charges. Details soon.
(Excerpt) Read more at cnn.com ...
Because that's what they had the insider information on. If Meeks had the government report on pork bellies, they'd have bought the pork bellies futures.
-PJ
-PJ
I can't argue with that.
The difficulty is that if all the Tom's and Alex's decide that no CEO can be trusted to keep their interest as stockholders as top priority, they sooner or later wind up keeping all their money in a glass jar in the basement. And who could blame them?
For whatever reason, the investment community (not just the government) has decided that it's not a good idea to incentivize the glass jar strategy.
I would definitely like to see a civil contract (not criminal law) method of preventing conflicts of CEO interest.
"Nobody knows the sun is going to rise tomorrow."
However, I can make a very educated guess, based on predictive facts, that it will indeed do so. If there was a way to make money based on betting whether or not the sun will rise tomorrow, I think I know the way I would bet. The same is true with insider trading.
For example, if my company does not get FDA approval for a drug I'm manufacturing, I cannot obtain additional capital which I need to remain operational. I can say with absolute certainty that my stock is going to be valueless in the future if I can’t remain in business. Now, I find out that the FDA is going to announce that my submission has been rejected. I know what the results of this rejection will be on my company. If I warn my friends of this fact, without warning my shareholders, then I have broken my fiduciary responsibilities as the director of a publicly traded company.
As a former stockbroker, Martha Stewart knew the rules, and knew she was breaking them with the information she received regarding ImClone.
We need to hear about her being a big Dim donor.
How can you say it is NOT WRONG to steal from others?
When Martha makes a killing overnight with insider knowledge, SOMEONE ELSE looses money. Perhaps some soon-to-be retirees in their pension funds.
When Hillary miraculously turned $1000 into $100,000 on cattle futures, SOMEONE ELSE had their $100,000 instantly reduced to $1000.
If Hillary did anything illegal or unethical in that trade, she effectively STOLE $99,000 from a fellow citizen.
It's not quite as black and white with Martha, but she was STILL STEALING from others based on an uneven playing field.
Ummmmmm...how did that become public opinion?
Yep. Whoever made the pic did so with that error/flaw. I got that in my e-mail and uploaded it to my website a long time ago.
Just as an aside, I was thinking earlier today, if, in the past, Martha Stewart gave political donations to solely Republicans, how many times would that be mentioned by the media, in all of these stories of the indictment? We need to hear about her being a big Dim donor.Yep. I did a Google Search and don't seem to find anything on her campaign $ donations to either party, but I DID find this little tidbit, lol!!:
http://www.indyweek.com/durham/2002-12-25/porch.html
'Jingle Bells ... Prison Cells'
Illustration By V.C. Rogers
B Y V I C K I W E N T Z
Well, it's that time of year again, and it looks like we may be watching Martha Stewart's holiday shows filmed on location--from the Connecticut State Junior League Prison and Spa for Women. I do admire the woman. (I admire anyone who can take four thumbtacks, a jelly doughnut, and a lawn chair, and turn them into a seven-course meal and a birdbath.) But, it must be tough to smile serenely through the 12 days of Christmas when it's more likely to be 5-to-7 years of Christmases! That's gotta bring out the humbug in most people.Even so, I wonder whether a go-getter like Martha would be stopped by a little thing like prison. I don't think so. After a few weeks to settle in, meet the other ladies, and figure out some camera angles, she'll be right back at it. I'm betting we'll see new books this season, with titles like, "Convicts and Christmas Cookies," or "Solitary Confinement: The Real Silent Night," or even "Mistletoe, and Other Things to Avoid in The Shower." And, the new shows will have snappy names like, "Oh Come, All Ye Felons," or "When You're Naughty and Nice," or maybe "Insider Trading: Do You Hear What I Hear?"
Each chapter or episode will show us how to make the season a little jollier while serving time. Subjects could include how to: decorate those cold cell bars (in lieu of a tree) with colorful strips of your worn orange coveralls; use a laundry marker to connect the stains on your mattress, forming a lovely map of Bethlehem; carve a turkey with a plastic spork; go caroling (not down in Carol's cell, which, trust me, is a whole different thing). And then, there are also the obvious shows, like on how to artfully bake a cell phone into a fruitcake, or what gift to give Butch and Babs in the next cell (Hint: probably not frankincense!). Can't you just smell the chestnuts roasting now?
But, there are things those ladies on the Inside can teach Martha, and I'd like to see those episodes, too. In fact, I would imagine one could only look down one's aristocratic nose at one's fellow inmates for just so long, before we tune in one day to see Martha lisping along to "All I Want For Christmas Is My Two Front Teeth," or maybe a "substitute host" doing a new show called "Yo, Martha, I Got Your Rum-pa-pum-pum Right Here!"
Martha won't be up the river for too long. Minimum, she'll get out early for teaching the warden how to knit a fabulous personalized Christmas stocking that, after the holidays, becomes a delightful personalized crockpot. When that time comes, her last show could be, "I'll Be (Out) For Christmas" or "Baby, It's (Cool) Outside." Or, perhaps it should simply be "Martha Stewart's Coming Out". Hmmm.
I'm afraid something is being lost in the translation.
Let's start with true trading being done by the true 'insider.' Corporate executive (CE)learns, by reason of his position, of information which will drive down the stock price when it becomes common knowledge. CE however occupies his position be reason of provision of the true owners of the company, the present stockholders (PSH). If and when CE races PSH to the marketplace, he is in a position to sell his stock before telling the persons to whom he owes a fiduciary duty -- his bosses, PSH.
There is no 'socialism' here -- mere breach of fiduciary duty. That's where insider trading starts.
Then, human nature being what it is, we realize that CE is very smart. He knows people will watch his accounts to see if he is defrauding his bosses, PSH. So, he doesn't sell himself. He tells his friends and relatives (CE'sF&R) and they do the selling and find ways to reward CE for his 'friendship'. Certainly, no less a breach of CE's duty to PSH. He has simply refined the fraud.
Then, the law adds two simple categories: (i) those who knowingly aid and abet CE in his wrongdoing are equally guilty (a longstanding idea in Anglo-Saxon law) and (ii) when you are asked if what you know about CE's nefarious plan to defraud his bosses, you can't lie.
Unfortunately, not-so-sweet Martha apparently did both: she aided and abetted Waksal (by trading on his fraud of his bosses) and then she covered up -- and she defrauded her own bosses by lying to them about what she had done. She did all of this because of her Hitlery mindset -- she is entitled to rip off the 'little people.'
Nothing 'socialistic' here. Just longstanding Anglo-Saxon law against breach of fiduciary duty and fraud. She deserves everything she gets.
Sure, except Martha wants to lie so she can defraud her own bosses, the shareholders of MSLO. If she had taken the 5th, she would have avoided the criminal consequences of her behavior in the IMCL stock sale (maybe), but her fraud on the MSLO stockholders (by far the bigger fraud for her) would have unraveled. No 5th to help her there.
What a web we weave when first we practice to deceive ....
How do you spell 'fiduciary'? The law spells it "put others ahead of yourself." It is the essence of a position of trust. The corporate executive would be poking through trash bins but for his bosses, the shareholders. The essence of their contract to lend the corporation their capital (the bedrock of our free enterprise system) is confidence that the highest duty of fidelity is owed by the corporation and its hired hands to the stockholders.
If slimeball Waksal had been sitting in his dubuque dentist's office filling teeth instead of behind his stockholder-provided desk and talking on his stockholder-provided telephone, he wouldn't have known that the FDA was going to reject the application. He had the information on which to profit because of and solely because of his fiduciary position. 'Insider trading'is profiting (or attempting to profit) at the expense of those to whom you owe a higher duty of trust.
If I sold you my clunker after steamcleaning the oil off the bottom of the transmission and adding "Sludge The Puppy" oil additive and telling you that it didn't leak oil, you would have no difficulty seeing the fraud. Just remember the hired hands would have no information on which to trade (that everyone didn't have) but for their fiduciary position.
"Insider trading" isn't some liberal scheme; it is the ancient Anglo-Saxon law of fiduciary duty and fraud in a very complex and technical setting. In an earlier day, Martha would have been a highwayman, because, as is her friend Hitlery, she's entitled.
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