05 Mar 2004 | Leona H. said...

Welcome to my world Martha. Looking forward to bunking with you!

05 Mar 2004 | Don Schenck said...

I'm very surprised and disappointed. My wife and I love Martha Stewart -- get her magazines, books, etc.

Looks like Donna Hay is gonna be the next hot-selling lifestyle diva.

(I did, however, sell my stock in the fall of 2001 - whew)

05 Mar 2004 | Charbel said...

How can she obstruct justice in a charge she was found not guilty of earlier...

05 Mar 2004 | Mark Fusco said...

I was a bit disappointed as well - not in the trial, but in the fact she got caught up in the scandal to begin with. My wife and I never got into her media - but I was a fan of her ability to build a media empire from relatively simple ideas.

05 Mar 2004 | said...

Has anyone seen a recent report on the disparity between gains made by a Senators or Congressmans investment portfolio to that of a private investor? Hmmm, insider trading?

I feel bad for Martha and I hope she get's off with a light sentence (like house arrest at my place and I can lay that sweet lady down and hammer some wrinkles into my 900-thread count Egyptian cotton sheets).

05 Mar 2004 | Jon Gales said...

It's sad they did this to her. It's a lot like the Rush Limbaugh case. Love him or hate him, they are only going after him because it's Rush.

You don't see many people that don't have the Stewart last name being hauled off like this for a stock trade (hell, not even the trade. For lying about it!).

If she is guilty, she has already learned her lesson.

And for the record, I have never watched her show or purchased any of her products. But I'm all for treating people equally.

05 Mar 2004 | Jeremy C. Wright said...

Some celebs will be guilty of stuff. Whenever someone says "they're only being targetted becuase they're celebs, let them off lightly to be equal" ... Isn't equal at all.

05 Mar 2004 | Jon Gales said...

Well if I had made the trade in question, I wouldn't be where Martha is. They wouldn't have gone through my cell phone records. I'm all for justice, but you have to treat everyone equally (but hey, at least Martha was allowed to have a lawyer).

05 Mar 2004 | ek said...

Hey, they put a hell of a lot more black people away from drug-related offenses than whites, so why not start putting white-folk in the pokey for securities related crimes? Kind of evens it out...in a weird, sort of way (actually, not really, given the disparity in the number of black people put in jail for the same crimes committed by whites).

Difference is, if she gets sentenced to any jail time at all, she'll do it in some minimum security, one-step-away-from-a-spa, facility, whereas Joe "Just Bought Some" Blow, will spend it in some nasty ass lockdown.

I guess my point is, what's fair have to do with any of this? And already learned her lesson? Somehow, I doubt it. People like Martha, Michael Eisner, Skilling, Ebbers, et al, live in a rosy colored world of denial.

05 Mar 2004 | ek said...

Jon, the point is, you wouldn't have been in a position to have made that trade (that is, unless you're a multi-millionaire with a cozy relationship with CEOs and a broker at your beck and call).

Is Martha the only executive or uber rich person to benefit financially from inside information? Of course not. But she got caught, committed a crime (in the form of lying to prosecuters), and should be subject to prosecution and punishment.

Why should the fact that "others do it too" exempt those who are caught from suffering the consequences? Doesn't make much sense to me.

By that logic, we couldn't prosecute anyone of anything unless we could prove that we catch every single person who commits a given crime.

05 Mar 2004 | Chris said...

My brother-in-law has had a serious hate on for Martha for years. He's never seen the show, doesn't read her magazines, has no idea about her, yet he hates her guts even though she has nothing to do with his existence. He hated her because she's rich and successful. I think he's jealous.

He figured Martha should be convicted. He thinks he's "the little guy" who benefits from watching people like Martha fry.

Recently my brother-in-law was caught making false insurance claims. Then he made matters worse by lying about lying. It was embarrassing to watch knowing what he was up to. He became infuriated claiming that "everybody does it" and it was "unfair and unjust" that he's the one who was caught. He has a list of his accountancies who committed petty crimes without any conviction.

I took pleasure (privately) watching him go through his little situation, all the while, thinking about his nasty hate for Martha and how her conviction would only be a big win for the "little guy".

Turns out this little guy is a greedy, lying, foolish "criminal" too.

Personally, I hate watching Martha tank. Her "Everyday Food" magazine has changed the way I eat. Seriously. It's amazing, better than anything out there.

05 Mar 2004 | ek said...

I too have been a Martha fan. I've been a subscriber to MSL for five or six years and enjoyed her show whenever I happened to catch it.

I also very much admired her rise to fame and fortune, because it was based on hard work, determination, and business/media savvy. Yes, she stepped on some toes along the way and probably wasn't a very nice person to many who worked for her, but few who manage to reach her position do it by being kind and gentle.

But, and this is a very big but, none of this absolves her from the crimes for which she's been prosecuted or gives her blanket immunity from prosecution, nor should it.

06 Mar 2004 | Neil said...

I always felt that the whole Martha Stewart thing was a smoke screen to hide the fact that none of the big boys (Enron, Worldcom, etc.) were really being pursued by the justice department.

Doesn't it stick everyone as a bit strange how it took the JD two years to lay charges involving Worldcom and Enron? Like, "let's wait until an election year to show folks just how harshly we're going to deal with these corporate evildoers" strange? Maybe I'm just a paranoid cynic.

Heck, who wants to lay bets that bin Laden gets captured mere months before the election?

06 Mar 2004 | Mike said...

It all reminds me of Office Space when they're at that outdoor barbecue. Michael and Samir are talking to a guy about white-collar prison, and then they drift off into a dream sequence about being sentenced to stay in "pound me in the ass" prison. BUT ANYWAY...

06 Mar 2004 | Tim said...

The Motley Fool pointed out a great/sad/whatever bit of irony about the case and conviction:

"The nightmare began back in Dec. 2001, when, on hearing from her broker that then-CEO Sam Waksal was selling stock (Waksal himself had heard that bad tidings were a-brewing at the FDA over cancer drug Erbitux), Stewart dumped some middling number of ImClone shares. The price? Somewhere in mid-$50s. The irony? After a harrowing ride to the single digits, ImClone closed today at around $47.50, within a hair of its 52-week highs."

07 Mar 2004 | patricia s said...

I thought our prisons were for dangerous people?
Putting Martha Stewart in prison is senseless .

07 Mar 2004 | Mr. Ethical said...

Sign this...

http://www.petitiononline.com/Martha/

08 Mar 2004 | Erin said...

Skilling (Enron), Waskal (ImClone), Ebbers (Worldcom) Rigas (Adelphia), etc. have not gone unpunished.

The difference between Martha Stewart and those listed above is that she's a media icon. But she's also the CEO of a corporation (her own) in addition to being a celebrity. Why should she be treated differently?

It's silly to think that other corrupt CEOs haven't had their e-mails, phone records, documents, etc. searched. You just don't hear about them because the general public doesn't know who these people are. They know Stewart, so the media reports every detail.

Stewart is a talented, creative genius. I really enjoy what comes out of her homemaking think-tank company. But she broke the law. Maybe now every CEO (or any other person) in America will think twice before committing fraud.

08 Mar 2004 | Bill Brown said...

Good commentary here and here.

08 Mar 2004 | p8 said...

From Bill's second link : First, it is important to grasp what a non-crime "insider trading" is. The allegation is that Sam Waksal, CEO of the drug-development company ImClone, phoned relatives and close friends to warn them of an upcoming FDA ruling that would wreck his company's stock. This "inside information" supposedly gave Stewart and others an "unfair" advantage. In a "fair" world, apparently, investors are forced to hold on to their stock even when they know it's going to crash. Martha's alleged "crime" is not wanting to lose money.

Bill, do you consider "insider trading" also a non-crime?
I think Waksal is the really guilty one (if evidence proved this).

Anyone who dares to poke his head above the crowd must be attacked, denigrated and brought down to the common level. ... This trend is not merely ugly; it's dangerous. A culture that hates its highest achievers will mow down its tall poppies and end up with nothing but weeds.

Wasn't ImClone a weed that looked like a tall poppie?
In other words: aren't insider trading investigations good in preventing dishonest/mediocre companies/CEO's.

08 Mar 2004 | Don Schenck said...

It's frustrating because our former President lied under oath and will never "do time"; Martha is convicted of lying and may do time.

I don't know; I think I'd rather see her fined and do community service. A *stiff* fine and *real* community service.

08 Mar 2004 | but that's just me said...

Who knows...maybe she could start a new magaine...Martha Stewart Prison Living

08 Mar 2004 | One of several Steves said...

How can she obstruct justice in a charge she was found not guilty of earlier...

She wasn't found not guilty. The charge was thrown out. Big difference.

And, even if you're innocent, you can still obstruct justice. If you committed a crime, I knew of it, and I lied to or hid stuff from investigators, I've obstructed justice. That's the logic of what went on here.

And, ek, I completley agree with you on the fairness and "others do it" issues. Did she get singled out? Maybe. But that's not the point. The fact is she did it, and there are consequences for that.

08 Mar 2004 | Bill Brown said...

p8: Yes, I think most of the securities laws we have nowadays would not exist in a freer society. Especially insider trading.

08 Mar 2004 | One of several Steves said...

Yes, I think most of the securities laws we have nowadays would not exist in a freer society. Especially insider trading.

That just astounds me. "Free market" does not mean an unregulated market. In fact, one of the fundamental principles of a free market is that everyone has access to the same information, and accurate information. It's a fundamental concept behind an open market, and a market cannot be open by definition if some parties have information that others don't. It's the same concept behind accurate accounting rules, financial reports, etc.

There are almost certainly some issues with the manner in which insider trading laws are written and enforced, but I find it incredibly baffling to suggest that not having insider trading laws somehow yields a freer market.

08 Mar 2004 | p8 said...

I couldn't agree more Steve.

Who would invest money in a company without knowing if the information about the company can be trusted?
Only fools and gamblers I guess.

08 Mar 2004 | Bill Brown said...

In fact, one of the fundamental principles of a free market is that everyone has access to the same information, and accurate information.

That's terribly naïve, Steve. It's also completely unrealistic. The theory of perfect competition has led to the creation of much of the economic regulation we have today even though it approximates a Platonic Form. Not everyone has access to the same information and it's not always accurate. Are you as aware and astute as institutional investors like mutual fund managers? Of course not. Is the information you do have access to perfectly accurate? Not likely, unless you're forking out big bucks, listening to every conference call, trudging through every filing, etc. Why pretend? It's an application of the specialization attendant with the division of labor.

And a free market does, in fact, mean an unregulated one. Well, unregulated except by the legal system.

There are many economists who defend insider trading and assail the bevy of securities laws that introduce dislocations into otherwise efficient securities markets, but they're not generally available on the Web. The closest I can find to a defense is this speech by some guy.

One thing to keep in mind is that giving out false information to influence the market would still be considered fraud in an otherwise unregulated market and the capital flight that would occur to any company practicing it would sap the perpetrators of victims and access to funds.

08 Mar 2004 | One of several Steves said...

That's terribly nave, Steve. It's also completely unrealistic.

It's neither. Just because I don't choose to avail myself of the information out there does not mean that there should not be the equal opportunity to access it. You bring up the example of institutional investors, mutual fund managers, etc. and the comparison of their information knowledge to mine. Which is why I hire mutual fund managers to do that job, so I don't have to. Or brokers. Or other financial professionals.

I'd have to do a bit of digging, because the name of the economist and the exact nature of the research escape me at the moment, but there was a Nobel given to someone a few years back who did quite extensive research showing how inequitable access to information runs contrary to a free market and results in the market running less efficiently.

And, by the way, the idea of unregulated free market is the Platonic ideal here. Yes, in a perfect world, markets would self-regulate and police themselves. Believing that ignores a couple fundamental aspects of human nature: One, they do not behave rationally or even in their own self-interest, something markets presume they do. Secondly, they are dishonest, greedy bastards who will do anything to get an edge, fair or otherwise, over everyone else.

I guess the better term of what I aspire to is fair markets. Free in most ways, but regulated as necessary to prevent behaviors that circumvent a free market, such as trusts, false reporting, etc.

08 Mar 2004 | One of several Steves said...

By the way, this New York Times article puts an interesting perspective on the idea of whether Martha Stewart was somehow being singled out.

If she was, it was probably less about something against Martha Stewart as wanting someone high-profile to show others that there's risk to not following the law. And, if the anecdotal evidence in the article is to be believed, cases like this (and Tyco and Enron) are having a desired effect by causing other execs to think twice about what they do, for fear of ending up in the same situation themselves.

09 Mar 2004 | Bill Brown said...

And that, Steve, is where we diverge: I'm for unalloyed economic liberty and you're for an economy tempered by some sense of social justice.

And I don't think that trusts circumvent the market, they're a way of gaining efficiencies of some kind. It's funny because we have consolidations and mergers that make Standard Oil and Northern Securities look like a local mom and pop bought another local mom and pop's convenience store. But still the perils of trusts are traipsed around.

09 Mar 2004 | One of several Steves said...

And that, Steve, is where we diverge: I'm for unalloyed economic liberty and you're for an economy tempered by some sense of social justice.

Where did you see any reference to social justice in what I wrote?

The reason I favor certain regulations is to preserve free, open markets. Markets are neither free nor open when some parties can exert advantages that by their nature lock others out. And, oddly enough, this is hardly a liberal argument, unless you consider "The Economist" a liberal magazine or the Nobel economics committee to be a bastion of liberalism. The work the latter has recognized of late, as I noted, points out the perils of having gross imbalances in information and access, and the former is a huge defender of free markets yet also advocates regulation as needed to preserve them.

None of the above are particularly concerned about social justice. And, in my beliefs of how markets should be run (as opposed to, say, tax policy), social justice doesn't enter into it at all.

09 Mar 2004 | Bill Brown said...

Hmm, you said you were for "fair markets" and then you say that you are against situations where "some parties can exert advantages that by their nature lock others out." That's pretty much the history of economic interventionism right there and represents an intrusion of theories of social justice (distorting economic institutions to serve some sort of egalitarian purpose).

Incidentally, insider trading does absolutely nothing to "lock others out." If you're participating in the market, an increase or decrease in the share price means nothing to you until you hear the public announcement of the news that's moving it. Plus, insider trading laws can do nothing about insiders not selling when they otherwise would have because of inside information.

09 Mar 2004 | One of several Steves said...

Hmm, you said you were for "fair markets" and then you say that you are against situations where "some parties can exert advantages that by their nature lock others out." That's pretty much the history of economic interventionism right there and represents an intrusion of theories of social justice (distorting economic institutions to serve some sort of egalitarian purpose).

Sloppy writing on my part regarding the use of "fair markets." I mean to convey free and open markets. And, as I pointed out, the irony of such is that they need regulation, at least on the open end.

As I said, in my evaluation of markets and resultant regulation, I don't care about the outcomes. It's equality of opportunity that is the big deal. And there's a significant difference between the two.

10 Mar 2004 | Bill Brown said...

One of my favorite economists, George Reisman, had a pamphlet devoted to this difference: "Freedom of Opportunity, Not Equality of Opportunity" ( excerpt)

11 Mar 2004 | Marilyn [email protected] said...

My granddaughter (ll yrs) said "grandma, I don't know why they want to put MS in jail...she wouldn't hurt anyone" Of the most enduring, likable, charming, educated, attractive intelligent women in the world, why do this to her? I've joked to my friends for years that in my next life I'm going to be Martha Stewart...I like her, respect her, will imulate her (as best as I can) and be waiting for her to climb the mountain again! Here's to you, Martha & may you find enough to do to keep you occupied & see what the future holds. The Lord works in mysterious ways, they say. Love you..