Martha Stewart

Thu Van,
I am glad to hear that you have had difficulty with some of the Martha Stewart recipes! And here I thought it was just me and living in the Mile High City. That dirty rice sounds atrocious.
I have made a few things that worked really well, but a few things just didn't work at all.

Julie,

I didn't take it that way. Actually, I find it fascinating that there are some people with such strong reaction to her. That's why I posted this thread. It has been fun to see how everyone feels.

The only project I have ever tried is wrapping 400 votive candles in tulle for our wedding. My now husband, then fiance, and my sister didn't think it was such a hot idea when they had to finish them all after I had a mini-bridal-melt-down. Don't you love family.

Emily

[SueC]

I've always thought it was odd, too, that people have such hatred for Martha Stewart (even before this scandal). I heard her interviewed once and she said she actually had to move out of a neighborhood because the people were not nice to her!
I have one of her books "Good Things" and there are a lot of cool ideas in there that look kind of simple, but I have never gotten around to actually doing any of them.

[PrincessFiona]

Martha

I have thought about this a lot over the last couple of days....I think I've always been fairly indifferent to Martha...I like her products but her recipes are out of my league for the most part.

Honestly guys..I feel sorry for her. She isn't even being indicted for the illegal sale of the stock because they didn't have enough evidence...they are going to try it in a civil lawsuit. One of the indictments against her is because she publically denied having done it...it falls under some really weird obstruction law that I don't understand.

When is the last time that we heard about these bigwigs from Enron et al who literally bankrupted thousands and thousands of people's retirement accounts, etc. They still have done no jail time and aren't being paraded about. I think that if Martha did commit this crime that the punishment is excessive. 10-20 years in Prison? Why not make her pay a huge fine. She has already lost milliions of dollars and has had to step down as CEO of her company....her reputation has been horribly tarnished.....

My dad works for American and at times has told me things going on within the company. I don't own any stock in anything right now, but if I did and I were to buy or sell stock based on something that he said I think it would fall under the same law....How many times do people get info from a neighbor or friend on the golf course to 'buy' or 'sell' that don't lose everything. I'm not necessarily saying it is right...but I don't know that it is worth losing everything.

What an awesome discussion...great topic, emilyann.

kris

[Rapunzel]

Re: Martha

My dad works for American and at times has told me things going on within the company. I don't own any stock in anything right now, but if I did and I were to buy or sell stock based on something that he said I think it would fall under the same law....How many times do people get info from a neighbor or friend on the golf course to 'buy' or 'sell' that don't lose everything. I'm not necessarily saying it is right...but I don't know that it is worth losing everything.
kris

See, that is exactly what I was confused about in a previous post - that acting in a common sense fashion is considered illegal. I still have a problem with the concept that telling your family and friends that a company is going to tank is illegal and necessitates jail time and hefty fines.

BTW - I am actually acquainted with two of the "bigwigs" at American Airlines - they are both old bishops actually and I still talk to their children and see them on occasion (one of their kids is getting married in a few weeks and we just got the "invite"). I wonder how much trouble I could get into if I held stock in American!!

Well, I'm not sure if I can state this very well (too sleepy ) but I'll try to present the opposite opinion.
I'm not sure what sorts of things your dad tells you, Kris. But if they have to do with contract negogiations, levels of employee satisfaction, that sort of thing, some if may be rumor based or the general feeling going around the company. If he is telling you that the company is going to fall short on analyst's earning expectations by 2 cents or that one of the most commonly used planes has been maintained incorrectly and the FAA is coming in to shake things up tomorrow at 8am -- that is different and could be illegal if you made a profit on stock based on his insider tips. This sort of specific information would affect the stock price. Is he telling you things that personally offend you or things that would make analysts downgrade the stock and mutual funds sell the stock out of serious concerns about performance? Information about the latter could be considered insider information.

I guess I'm saying that the golf course chit-chat and family/friends talk over coffee tends to be less specific and is generally known by people in the company and probably some outside too. When I was at my big corporation, we went through some rumored mergers, an actual merger, SEC investigations (after I left , phew), and stock prices that fell like a rock. Since I worked in the financial arena, I heard some buzz about this but not what you would consider "insider" information. I never knew what the quarterly earnings would be before they were released -- maybe I had an idea of the direction or that there was concern but never *actual figures* -- and if I did know, I would be stupid to tell anyone outside about it. If I did know about a division of the company being shut down or an executive getting the boot before anyone else knew, I kept quiet about it.
And I did tell people outside of the company -- somtimes shareholders -- about what it was like to be an employee there and the general feelings and rumors going around. It would have been foolish for someone to entirely base a buy or sell decision off of what I said. Especially because during hard times for a company employees tend to be rather negative about any news they hear.

I think it absolutely should be illegal for friends and family of company executives to profit from insider information about a company.

Here is a little background on insider trading and when and why it is illegal. Sorry, it is kind of long. If you find it boring, just skip it.
Let me say that I am not a securities lawyer and these laws are very complicated, so I make no representations about the accuracy of this information. This is not legal advice. Kelly, help me out here.

I found this Q & A in the Seattle Times:


" What constitutes insider trading and is it always illegal?

A. It?s a complex issue. The buying or selling of stock in the company one works for is considered insider trading and can be either legal or illegal. It depends on whether the company insider uses information not available to the public in making the trade.

Company officials, directors, key employees and big shareholders are considered to be insiders who must not use advance knowledge or confidential information to trade the stock. But company insiders also can come in contact with all kinds of outside people they may spread information to: consultants, bicycle couriers, lawyers, taxi drivers, doctors, family members. These people, though they have no connection to the company, also can be charged with illegal insider trading if they use the nonpublic information.

Q. What?s the thinking behind this?

A. The idea is that the stock market should be a level playing field in which everyone has the same information and the same chance to profit.

Q. What about legal insider trading?

A. Company officers and directors routinely sell billions of dollars of their companies? stock each year. A new report by Thomson Financial, in fact, shows that company insiders sold more than $3.1 billion in shares last month ? the biggest monthly volume in two years.

Company insiders must report these sales to the Securities and Exchange Commission. Starting June 30, they will have to file reports of inside stock sales and purchases electronically to the SEC ? no longer on paper forms ? and on their companies? Web sites within two business days of the stock transactions instead of the current longer deadlines, most often 40 days. This will give investors the information more quickly.

Q. In cases where insider trading is considered illegal, does the government always bring criminal charges?

A. No. In many cases only civil insider-trading charges are filed, by the SEC. It depends partly on the severity of the alleged violations and how much money the person being charged made from the trades. In those cases, the SEC often files suit seeking fines against the individual and restitution of allegedly ill-gotten profits.

That is the case with Stewart, who allegedly avoided $45,000 in losses by selling ImClone in advance of the disappointing news.

In more severe cases, Justice Department prosecutors may bring criminal charges of insider trading, as happened with former Enron finance chief Andrew Fastow last month. A conviction can mean a prison sentence. Stewart was not an insider in the company whose stock she sold, likely one of the reasons she was not charged criminally with insider trading. She does face criminal securities fraud and obstruction of justice charges.

Stewart?s friend, ImClone founder Samuel Waksal, will be sentenced next week after pleading guilty to six counts of criminal charges in the insider-trading scandal. He could get to six to seven years in prison, plus fines.

Waksal has admitted he tipped off his daughter Aliza to sell ImClone stock before it plummeted on the bad news. But he has not implicated Stewart, and his plea was not part of an agreement to cooperate with prosecutors."

Copyright © 2003 The Seattle Times Company

So, the problem is not in buying or selling the stock of a company you are close to, or using your common sense. The problem is using information that you have because of your special relationship to the company, that others in the general public don't have, to make a profit or avoid a loss.

As to the securities fraud that Martha was criminally charged with, it is also illegal to make a materially false statement to defraud or decieve another in connection with the purchase or sale of a stock. The indictment alleges that Martha told the media that she had a standing order to sell the stock when it dropped below a certain price (which the government alleges is a lie) in order to keep the price of stock in her own company (martha stewart living) from falling.

If there is anyone out there with more information in this area, please correct me if I misstated anything.

[PrincessFiona]

wow

Wow..Nellie, Emily..thanks for the info.

I'd have to say that I still think that there is a real slippery slope here. Many times, my dad hasn't had exact info that directly related to the stock dropping...but certainly the things that he knew that were going on have had the opportunity to affect the stocks...and he, for the most part, just has the same company insider info that everyone else in the company has....I honestly can't say what I would do if I owned stock in a company and my neighbor who worked there said "sell". I don't know what I'd do....that is a horrible moral dilmna...I feel guilty even saying that I don't know. Remind me to never buy stock. Or at least to never buy stock in a company my friend owns!!!!


As to Martha....the indictment against her for criminal securities fraud is the weird one. They made this charge based on the fact that she publically proclaimed her innocense. This, they charged, was an attempt to artificially raise the stock in her own company by saying she didn't do it....that's weird....so people can't even proclaim their innocense?

Waksal implicated his DAUGHTER, but not Martha Stewart? Wow..you know..maybe she is innocent.....Is his daughter going to be indicted, btw?

kris

kris

[twinsmom]

All of this talk about insider trading, stocks, market, etc, just makes me glad that we don't have enough money for this weekend's garage sale extravaganza, let alone to even think about investing . (and here I thought I would never find a reason to be glad about living the lowly medical school life of student loans ).

As for Martha Stewart - I don't really have a strong opinion of her one way or the other, but since I need a little more conversation then the goo-goos and ga-gas that I've been having all morning, I'll chip in my $.02 ...

I, like some of you have already posted, do like some of her ideas, and laugh right out loud at the others. I really enjoyed her lesson of preserving special articals of clothing (i.e. blessing dresses, favorite jerseys, etc), but when I watched a segment on building your own reading lamp from scratch, and realized it would be one of the most expensive pieces of 'furniture' in our home (not to mention the time and headache in putting it all together), I thought, "thanks for the tip... I'll be running down to our local Wal-Mart to purchase one from the 'roll-back-the-prices-isle' now."

I also love to cook, but I take it as a hint that the recipe is a little over my head when I can't even pronounce the majority of the ingredients involved (let alone afford to have them flown in fresh from Panaquinana Island ).

Okay, I see that this is getting to be more $.04, and getting a little off the topic of the economics/trading, etc... but here's just one more observation...
I think that part of the reason why people have such strong opinions about her is that she has made billions of dollars from portraying the 'sweet, serene, "I just want to help my neighbor" ' image, when most of time, her behind the scene efforts have been at times completely opposite.

Another aspect - that comes from anyone who has been in the lime-light or fallen into good graces financially - there seems to be some sort of effort, small though it may be in some cases, to help others in different ways. As an example of this - I can name about a thousand things that Oprah (I realize that I may be opening up a whole new can of worms here and taking this into a little 'right-field' tangent) has done to try to help people. Ya, she makes no bones about the fact that she has more money then she can spend in about 5 lifetimes, but she is also constantly looking for ways to help other people. The same goes for a great deal of others in the 'high financial, high spotlight' arena (If only we could tap into that and get them to start a "med student education fund... ).

With Martha, I have yet to hear (if you do know of any humane act, please, enlighten me and I will quickly get off my high horse about it) anything that she has done, other then push around more people in her effort to get to the top.

Having said this, I realize I have just opened up a whole new area from which you can bring in all sorts of people who have done the same thing that she has done without the same reprocussions - and before you get into it, let me just say, that I wholeheartedly agree with you. However, my point is that most other people did not get to the top trying to sell a sweet, docile image of themselves to the world.

Wow, for someone who doesn't really have a strong opinion on the topic, I really can go off . Sorry about the not-so-important points... I'll be going now... diapers to change...dishes to do...Martha Stewart Maganzine to read... . (As if we could afford even the magazine at this point in time!!)

Have a great day!!


Jen B.

Re: wow

I'd have to say that I still think that there is a real slippery slope here. Many times, my dad hasn't had exact info that directly related to the stock dropping...but certainly the things that he knew that were going on have had the opportunity to affect the stocks...and he, for the most part, just has the same company insider info that everyone else in the company has....I honestly can't say what I would do if I owned stock in a company and my neighbor who worked there said "sell". I don't know what I'd do....that is a horrible moral dilmna...I feel guilty even saying that I don't know. Remind me to never buy stock. Or at least to never buy stock in a company my friend owns!!!!

I should give a similar disclaimer to emilyann -- not only am I not an expert in this area, I have not studied in law school! My knowledge of this comes from what I have read in the business section of the newspaper, financial magazines, company training seminars, etc.

Kris, if my neighbor worked at a company that I held stock in and just said "you should sell" I would have to ask why. And if he gave a very specific answer as to indicate he was sharing information he shouldn't.....it would be hard to decide what to do but I hope that I wouldn't sell just based on his information. I would probably check out the yahoo message boards for that company and decide. Just kidding -- those message boards have an ounce of truth for 10 pounds of rumor. I hope I would research the stock through various means and come to my own decision. I think that the people that have information that would be considered insider information tend to be high-level executives, board members, or employees preparing financial statements (and the high level financial statements not just department specific), or those in the legal dept.

Here is an example I thought of. All of this is made up -- except the company name .
Scenario A -- Let's say my neighbor works for Enron. He is in upper management and I keep noticing how his cars get nicer and the remodeling projects get bigger. So, I ask him how his company is doing. He tells me it is great -- he keeps getting bonuses, big grants of stock options, and thinks the company is headed in a great direction. He even says that the company has beat street estimates for earnings by at least 25% every quarter and that their contracts are doubling in number and value year over year for the last three years. He thinks it is a great company to invest in. If I decide to buy stock based on what he says, I don't think I have received insider information. All of this is either his opinion or facts that are easily verified. Then let's say that I notice him selling his cars, buying jalopies, and eventually selling his house (and that I don't ever read the paper or watch the news). He tells me the company is taking a nose-dive, the stock price is falling, they are being investigated, and that "things don't look good." Upon hearing this, I immediately sell my stock -- fortunately before bankruptcy is declared. Is this insider trading? In my opinion, I don't think so because all the information is relatively public and the rest is his opinion.

Scenario B -- All of the above through me buying the stock. 6 months later (before the car and house sales), he comes to me and asks if I ever bought Enron stock like we discussed. I say yes and I am so happy with the gains but a little concerned about the recent price drop. He says -- take my advice, sell it as soon as the market opens tomorrow because the company will annouce tomorrow afternoon that it is being investigated. I think this is an insider tip because he is letting me know information that has not been released to the public and will certainly have an immediate, material effect on the stock price. Since my holdings are probably small compared to company executives, directors, or other major shareholders, my sale would probably go unnoticed.....but probably isn't ok.

Again, this is just the world according to moi.

[PrincessFiona]

stocks

I agree with your scenarios...I think it would be hard to make the "right" decision. I hope that I would be able to do the same....in any case, if I didn't...I know I wouldn't be able to sleep at night and it would drive me nuts until I would proably turn myself over to the FEDS seriously.

I think that M. Stewart should have to pay some fines...but I don't know aobut jail time....then again....if I would go to jail then so should she...I am fascinated by the discussion....and I'm curious about what evidence will come out against her, etc. in the coming weeks.

kris

Something else I thought of (can you tell I've been thinking about this): people who have insider information KNOW they have insider information. And they know how they are supposed to handle it.

And before you picture yourself behind bars (where is the in prison emoticon?), I think that one of the articles I read about this said that those who gain from receiving insider information sometimes pay back the gains and a fine. They don't always go to jail. Maybe it just depends on the level of badness. Martha is special.

[PrincessFiona]

update

I meant to update this the other day...but I was watching CNN and apparently Martha 'only' sold 4000 shares of her Imclone stock and is being indicted. Waksal's daughter sold 40,000 shares 8O and is not....isn't that ridiculous?

kris

I think they are using her as an example -- because of her celebrity the case and situation are getting a lot of attention. If it was just Waksal's daughter, I'll bet the story would be a blip at the back of the newspaper -- if that.
Maybe someone will bake her a cake with a file in it.

[Meenah]

LOL.