Martha Stewart

A federal court in New York indicted Maratha today for securities fraud and obstruction of justice. For those of you that haven't been following the story, Martha allegedly (according to the indictment) sold her shares of ImClone stock after she learned from her stock broker that the FDA was going to deny its application for a new cancer drug. Right after she sold her stock, the news broke and the price of the shares fell. According to the indictment, when she sold the shares, she made around $200,000 dollars. If she hadn't had the insider info and had sold the shares on the day the stock fell she would have lost 45-50K. The indictment charges her with conspiracy and obstruction of justice for making false statements in connection with the investigation. The securities fraud charge is based on statements she made after details of the investigation became public to help the fate of her own company's stock. If you want to learn more check out thesmokinggun.com.

So, I just wondered what everyone thought about this situation, and about Martha in general.

I have been fascinated with the whole story. I was glued to Marth, Inc., the made for T.V. movie that aired a couple of weeks ago.

There is something admirable about Martha. She started from near nothing and created a billion dollar company. On the other hand, she sets standards that are impossible for anyone to live up to, and isn't the person that she appears to be.

Also, as much money as she is worth, it is reprehensible that she violated the securities laws over a couple hundred thousand and then lied about it.

Just wondered what your thoughts were on the matter. One thing I wonder about is do you think Martha has helped or harmed other women?

Emily

I think Martha Stewart has helped some women -- some find her inspirational, she does have a lot of fun projects, etc. And harmful to some women who feel that they have to be like her to be a good wife/mom/etc (although I think part of that is a need to deal with their own issues). So, no more helpful or harmful than other public figures, in my opinion.

The thing I don't get is: was all this really worth $200K? When you have as much money as she does, what is a $40K loss? Except for a write-off!

Part of me wonders why the feds are so keen in pursuing her. It seems their time would be better spent pursuing other corporate criminals (the former CEO of my former employer quickly comes to mind).

Interesting topic.

[Auspicious]

I think she's like any other aggressive entrepreneur, but somehow because she's an entrepreneur in the realm of "domestic life" people tend to make the faulty assumption that she's going to be a warm and fuzzy person. I don't think she even comes across very warm and fuzzy on TV--she always seems pretty wooden and serious.

I've only seen her show maybe a dozen or twenty times and I've never read the magazine, but I've never seen her "set a standard" really--it seems more like she's just suggesting these crazy projects and showing how they can be done. I enjoy watching her make soap or sepia-toned picture albums or whatever, but I don't for a minute think that that's how I should be spending my time.

I don't know why so many people resent her so much. It's the same sort of thing as Kris's "Mommy Comparisons" thread, but at least Kris is comparing herself to an actual peer; comparing yourself to Martha Stewart (and her extensive staff of producers) is just masochistic.

Has she helped or hurt women? . . . I say both. Any time a woman achieves a seat of power and influence, the world gets a little more used to seeing women have power and influence and that helps that shoe fit all women better.

However, any time a woman achieves a seat of power and influence and then is revealed to be (or perceived to be) dishonest or an intolerable human being, it makes it look like women have to choose one or the other (be a powerful woman OR be a good woman).

I dunno.

[Rapunzel]

My thoughts:

First regarding the Martha Stewart empire: I think she is threatening to two large groups of people including 1)male entrepreneurs/corporate leaders who aren't very used to having to "play with girls" and 2)feminists who cringe at her wild success marketing a lifestyle they have attempted to paint as bad for women (just as an aside my grandmother-in-law, also a Martha, was another woman who made quite a nice living off of marketing home-making - including being a college professor, writing books, and starting a couple of successful state associations while helping her husband's restaraunt/catering business take off). The name "Martha Stewart" now stands for a company of many, many individuals coming up with projects, ideas, a magazine, a tv show, etc, etc and for any person to think of the myriad projects and articles published and marketed under the Martha Stewart label as a true reflection of all of the capabilities of Martha Stewart the person is very simplistic.

Second thought regarding Ms. Stewart's personal life: Who cares? So the woman has her witchy moments, has obvious opinions about life, went through a painful divorce after a failed marriage, and has had a difficult relationship with her child. I think that might describe about 50% of the women in America so it is just a big bowl of nothing to me.

Third thought regarding the present indictment: What I have read says that Ms. Stewart maintains she had an agreement with her stock broker to automatically and immediately sell her stock in question once it dipped to a certain amount. If this is the case I really can't see what she has done wrong. If this is not the case I don't know how the federal authorities can "prove" they are right because isn't it just a she said/they said subject at that point - especially if this is a witness-less crime and there is no written/verbally recorded proof to back up the federal charges? I don't know - perhaps her stockbroker wrote something down and that is being used as evidence not released to the media....

Finally, I have always been very uncertain as to why her alleged crime is a crime to begin with. If someone knows a company is going to take a dive why is it illegal for them to inform their friends and family?

The crime committed, if she did do it, is that she was making trades based on information that wasn't available to the general public. Stockholders (large and small) had no idea that the FDA wasn't going to approve the IMClone drug. If there were public information suggesting problems with the FDA, say a company press release or something published or a buzz amongst analysts on a TV show, then it would be a different story.

The large corporation that I used to work for prohibited employees from trading company stock in their 401(k) plans ten days before quarterly earnings were released. I believe that this also extended to any personally held company stock. In some cases, no trading periods for all executive level employees were also enforced (around a speculated merger). The idea is that a company doesn't want to give any impression that employees, many of whom know about earnings or other strategic company information before public release, are benefitting financially from that "insider" information.

Like you said, Martha Stewart's case is a he said/she said sort of thing. She and her broker said they have a verbal sell agreement. I think the thing that is fishy about their contention is that brokerage firms typically enter a sell order like that into their computer systems and the order generates a paper copy for the client and a record for the brokerage. I don't know how common it is to have verbal orders like that but as a client or a broker I would feel better about having paper copies.

A few interesting quotes from the news.
From USA Today:
"If the government goes after Stewart on an inside trading charge, it faces a difficult path, says Jack Coffee, an expert in securities law at Columbia University. ''This is not plain vanilla insider trading,'' he says. ''Here, you would be prosecuting the person receiving the information. That's pushing the envelope further than the government has in the past.''

Defense lawyer Richard Ben-Veniste says an unknown business person would not likely be charged under the same circumstances. ''The current climate is exquisitely bad for high-profile individuals who are alleged to have violated the securities laws,'' says Ben-Veniste of Mayer Brown Rowe & Maw."

From Reuters:
""My personal opinion has always been that they have treated this case more seriously because it is Martha Stewart, in part because she has always put her reputation on the line as part of her professional status," said Jill Fisch, a law professor at Fordham University."


Like I said before, why are they so determined to prosecute her? I think their efforts would be better spent on some of the corporate weasels who swindled their companies, employees, and shareholders of A LOT more money. And if she did do this, being a former stockbroker herself and knowing better, was it really worth the money she made? Versus what she would have lost?

[Meenah]

OK, I have to jump in here. If she is guilty, she is a criminal and should be treated like anyone else who commits a crime regarding Trade Fraud, etc. I for one think if "Sam" admitted to being guilty, she has no recourse. Just my .02 worth
Luanne

You're right Luann. I don't mean to imply that just because there are bigger fish to fry she should be let off the hook.
I didn't know that Sam Waksal had plead guilty....

[SueC]

I was watching this story on ABC and found it interesting that they said anyone else (non-celeb) that did this sort of thing would have to basically give back the money, say they won't do it again, end of story. No jail time or fancy trial. I'm not sure why I'm even jumping in because I don't care anything about this whole deal! I tend not to get passionate about anything that doesn't directly affect me or my family. I know in the larger scheme of things this type of thing affects everyone and it isn't fair for the people with all of the money to be privy to information that the rest of us aren't getting.

It is interesting to read these replies. I personally admire what Martha has done and the company she has created. That's why I feel like it is such a shame that this stuff has happened. The interesting thing about the charges against her yesterday is that she was not charged with using inside information on the ImClone deal. They charged her with securities fraud for making false statements that she was innocent to bolster the sale of her own company, Martha Stewart Living Omnimedia. I am not positive, but I think the SEC plans to file a civil suit against her on the ImClone stuff.

About the standards thing, mostly what I meant was that she makes a simple dinner party or project into a twenty-two step affair. She makes it look and sound easy, when in reality her full staff spent hours of work behind the scenes. I also mentioned it in response to the "mommy comparison" thread. Maybe it is insecure to compare oneself to others, but it is easy to do, and I don't know who among us hasn't done it at one time or another. This is something I really struggle with myself.

You know, I really shouldn't care, but I guess for me the Martha situation just personifies a personal struggle about whether women can have it all (i.e. successful career, great marriage, happy family, beautiful home). I think the best answer I have heard is what Maria Shriver said "I can have it all, but I just can't have it all at once."

Okay, so this is not really about Martha anymore. Sorry to diverge down the path of my own insecurities.

P.S. I just finished reading the comparison thread, and you are all so right. Why should I compare myself to others? Aggh, something else I need to work on! (just kidding). Emily

This is a great topic, Emilyann! And it does dovetail with the mommy comparison thread.

When I initially responded to your question, I was thinking of what the Martha Stewart *product* had done for people more than what sort of example she is/was. I agree with Julie and others that she is a great example of a woman who believed in her skills and product, saw a market niche for them, and pursued it very successfully.

I too (like everyone else I am finding out) compare myself and berate myself about not measuring up to certain ideals or activities/accomplishments of other people. Unproductive and unhealthy but certainly human. And I think that people do this with Martha Stewart. But I don't really think it is her fault -- feeling like I should be more like her (I actually don't) is more my problem than hers. I did subscribe to her magazine for a year but cancelled the subscription because I felt overwhelmed by the amount of stuff in the magazine. If they offered a Martha Stewart Living "Light" I might be interested!! And Julie -- I think I made those sepia print pictures you saw on the TV show. They made great Christmas gifts! One of the only Martha Stewart projects I have done....

The thing I don't like about the way Martha Stewart does things is that she does project an image that she did all this stuff by herself and if she weren't busy typing up the magazine and being on the TV show, she would be home doing these crafts, baking projects, combing her 15 cats hair by hair, etc. Not that she cares , but I would like her more if she acknowledged some of the great, talented people she has working with her. (And maybe she does, I don't read her magazine much any more and rarely watch the show). And certainly her image and her as a person is a big part of the company....but it wouldn't hurt to give a little credit sometimes.

Sign me up for "Martha Stewart Light."

I find Martha Stewart to be a form of entertainment. Some of the stuff on her shows/magazines vary between being informative (what different types of flowers are), to inane (how to peel and cut a mango), to ridiculous (make an entire Victorian costume from coffee filters). As an avid cook always looking for new recipes I am usually just interested in her recipes. Once I made this "dirty rice" dish - a creole/cajun creation and I'd have to say it was one of the most disgusting things I had ever served my family. Not only did it look dirty from the mashed chicken livers (what possessed me to make anything with chicken livers still perplexes me to this day) but it tasted like dirt too. My sons wanted to take it outside and douse water on it and make mud pies.

I think several things are happening. First, I do think she profited illegally from insider information and second, she hid and denied it. I do think she should face the consequences for any criminal activity. But I do also believe that she is being treated more harshly because she is Martha Stewart and it's easy to hate her. I don't know if she will face jail time or not but if she doesn't I think it will just end up being a lot of hot air.

As far as being good or bad for women, I think it's mainly the feminist movement that find her the most deplorable. Her empire revolves around women being domestic goddesses which they are trying to steer away from. The rest of us, I don't think, really strive to be like her or unlike her. She's not any different from certain sections of Woman's Day or Better Homes and Gardens. You take from her what you will and if it works, great. If not, just toss it in the garden and douse it with water.

[Rapunzel]

As someone who subscribes to Martha Stewart Living magazine I have to say the projects have gotten ridiculous and most of the recipes are just not realistic or tempting. I first subscribed to that magazine a couple of years ago when it was very thick and chock full of useful tips, projects, how-to's, etc. Now, the magazine is fully half as thick as it was last year and it seems like the editors have literally run out of ideas for stories so they are coming up with inane garbage. I think that drop in quality might also have something to do with their stock taking a dip lately (although bad publicity is to blame as well of course). Anyway, I don't care if Martha Stewart ends up in jail because IF her magazine editors get their act together and improve the quality of their product I'll keep buying it. The company definitely needs to distance itself from its namesake in order to stay successful - they also need to bring in new people with fresh ideas or else their magazine will continue to lose viability in my opinion.

I think it is great the Martha Stewart was able to be so successful in an area that hadn't been tapped before. I don't think she hurt women. She showed that you can be successful in different areas.

I am the first to admit that I spend way too much time comparing myself to others. It is by far my worse self-defeating behavior. HOWEVER, Martha Stewart has never been a problem for me at all. I have seen a few shows and watched her Christmas special. It was obvious to me that this woman has too much time on her hands! Now if she could do these same projects with four boys running around her distracting her every couple of minutes and taking her supplies ... maybe I would be intimidated! I don't have the time to do the projects she does and really ... no desire.

If she did the crime, she should pay. It would be interesting to see how much money she has already lost just with the publicity.

Robin

[Auspicious]

Sorry if my post sounded like I thought YOU were nuts, Emilyann. That's not what I meant. I think your take on the topic was fine and level-headed. I know other people (*cough*mySIL*cough*) who's blood seems to boil every time they hear the words "Martha Stewart." I just have to think, Oh relax already!


Plus I have to say I wasn't aware that feminists have a problem with her. Was there a specific incidence of this I missed (like a famous feminist deriding her or something) or is this more of a general sense people have?