Martha Stewart got pwned

Revs · Post by **Revs** » March 5, 2004, 5:46 pm

http://story.news.yahoo.com/news?tmpl=s ... ha_stewart

Can't lie to the feds, hun. At least you'll get less than the max

Midnyte_Ragebringer · Post by **Midnyte_Ragebringer** » March 5, 2004, 5:52 pm

I'm glad she will pay the consequences for breaking the law.

Lalanae · Post by **Lalanae** » March 5, 2004, 6:00 pm

yes, she is an evil-doer.

masteen · Post by **masteen** » March 5, 2004, 6:03 pm

At least now we'll find out how to make a shank that's both functional AND beautiful.

Midnyte_Ragebringer · Post by **Midnyte_Ragebringer** » March 5, 2004, 6:10 pm

masteen wrote:At least now we'll find out how to make a shank that's both functional AND beautiful.

ROFL

Chmee · Post by **Chmee** » March 5, 2004, 6:36 pm

Complete and utter crock.

I hope she wins the appeal.

Winnow · Post by **Winnow** » March 5, 2004, 6:40 pm

Martha's pretty hot for a 62 year old. She'll make friends easy in the clink.

Sirensa · Post by **Sirensa** » March 5, 2004, 6:43 pm

In closing arguments, defense attorney Robert Morvillo said that the conspiracy as outlined by the government was too sloppy to be true. He urged the jury to let Stewart get back to "improving the quality of life for all of us."

"If you do that," he said, echoing Stewart's slogan, "it's a good thing."

She's also guilty of really cheese attorney'isms. LOCK HER UP FOR LIFE!

I'd have convinced her on this closing argument alone, personally

Marbus · Post by **Marbus** » March 5, 2004, 7:46 pm

It's this type of crime that hurts all of us, everyone who owns stock, I think she should be made an example of...

Marb

Aslanna · Post by **Aslanna** » March 5, 2004, 8:02 pm

Chmee wrote:Complete and utter crock.

I hope she wins the appeal.

What makes you think that? Were you on the jury?

Then agan, I wasn't either. Burn in hell, Martha!

valryte · Post by **valryte** » March 5, 2004, 8:17 pm

Chmee wrote:
Complete and utter crock.

I hope she wins the appeal.

So let me get this straight, some insanly rich bitch becides to fuck everyone else and dump her stock for a mere $250,000 when she was worth over a billion dollars and you think it's OK? Dude, give me your phone number, I got some stock to sell you...

Forthe · Post by **Forthe** » March 5, 2004, 9:39 pm

Chmee wrote:Complete and utter crock.

I hope she wins the appeal.

I'm surprised someone with extremist free market views is so lax on insider trading.

Krimson Klaw · Post by **Krimson Klaw** » March 5, 2004, 9:49 pm

I plead the FIF!

fif..

FIF!!

one two three four FIF!

kyoukan · Post by **kyoukan** » March 6, 2004, 5:51 am

Don't be naive. Jail isn't for wealthy people.

Pherr the Dorf · Post by **Pherr the Dorf** » March 6, 2004, 12:48 pm

Club Fed is tho

Chmee · Post by **Chmee** » March 6, 2004, 1:57 pm

Aslanna wrote:
Chmee wrote:Complete and utter crock.

I hope she wins the appeal.
What makes you think that? Were you on the jury?

Then agan, I wasn't either. Burn in hell, Martha!

Nope wasn't on the jury (obviously as she was found guilty). I have been following the case though.

Commentary about the case

http://www.reason.com/0310/fe.mm.st.shtml

http://www.techcentralstation.com/021004G.html

http://www.professorbainbridge.com/corp ... index.html

Elizabeth Koch covered the whole trial, her observations start here.

http://www.reason.com/martha/jan27.shtml

Chmee · Post by **Chmee** » March 6, 2004, 2:00 pm

valryte wrote:
Chmee wrote:
Complete and utter crock.

I hope she wins the appeal.
So let me get this straight, some insanly rich bitch becides to fuck everyone else and dump her stock for a mere $250,000 when she was worth over a billion dollars and you think it's OK? Dude, give me your phone number, I got some stock to sell you...

Martha being rich is immaterial. Everyone is supposed to be equal before the law. Yes, I know there are problems that occur were rich people get off of charges when they want. That is also wrong, but it doesn't justify being wrong in the other direction as well.

Chmee · Post by **Chmee** » March 6, 2004, 2:01 pm

Forthe wrote:
Chmee wrote:Complete and utter crock.

I hope she wins the appeal.
I'm surprised someone with extremist free market views is so lax on insider trading.

Martha wasn't convicted of insider trading.

As a reader over at http://www.instapundit.com so aptly put it ...

"So, am I correct in assuming she has been found guilty of covering up crimes the government couldn't prove she committed?"

Aaeamdar · Post by **Aaeamdar** » March 6, 2004, 5:55 pm

There is nothing inherently wrong with being convicted of attempting to cover up a crime that the government could not independantly convict on. In fact, if it were, it would lead to the rather perverse result that if you openly took actions to obstruct justice successfully enough, that you success in covering up your crime also netted you immunity from prosecution for the coverup.

Frankly, Stewart should consider herself lucky. The judge tossed out the most serious (if most difficult to prove) charge in a rather unconvicing opinion on sufficiency of the evidence. The resulting likely securities fraud conviction had the Judge allowed this to go to a jury would have been a huge. Minimum jail time would have been in the 5 year range, rather than the likely 4 concurrent 1 year sentances she is likely to get.

Her wealth, also, does have somethig to do with this crime, IMO. Or if not directly, it is relevant in considering how people should feel about it. At the heart of these crimes is a person worth tens of millions (more?) willing to use insider information to save for her what would be pocket change - $45k (to convict her of obstruction under these circumstances does not require that you be able to convict on 10b-5, but does require that you essentially believe she was guilty, even if not at a b.r.d. standard). It may have no bearing on the legal outcome, but it does have bearing on considerations of justice. Given the role of Juries in our system (they are not merely computerized finders of fact, but rather to some degree "bill of attainder" legislators, kept in check from extreems by our laws and by Judges), I think this consideration of justice is appropriate as well.

There are pleanty of reasons to critisize the Jury system (though as a potential "innocent defendant", I think our system does a pretty fair job), but I think critisizing this particular outcome as "clearly wrong" or "abberant" under that system is a difficult arguement.

Deward · Post by **Deward** » March 8, 2004, 11:34 am

I didn't follow the case that close but is it really necesary to throw someone in jail over this? Honestly this is a petty crime at best with no real victims in my opinion. She should be heavily fined and given a black mark on her record. Sure she is a bitch in real life but jail time is a harsh punishment when there are crazy fuckers out there doing less for rape and other violent crimes.

I own and trade stock too and I don't think her insider trading screwed me in any way.

Aaeamdar · Post by **Aaeamdar** » March 8, 2004, 12:45 pm

There is a school of thought that insider trading should not be illegal (and soe suggest that it should be encouraged). The basic suggestion is that it is merely a matter of wealth distribution, and not something that actually substantively changes the markets. There is certainly some logic to that on an individual basis. A security is priced at X on day A. On day A+B, an event happens that triggers the devaluation of the security to X-Y. The market's total value has decreased by the number os share of the security (N) * (X-Y). That is the case whether or not Person I had insider information or not.

Insider trading laws have the effect of requiring people who gain information prior to that information becoming public to bear the costs of the knowable effects the ultimate revelation of that information, rather than transfering those costs to the market in general.

There is likewise a quite reasonable (and in fact clearly correct when viewed in isolation) arguement that no one is harmed by insider trading. That is, if I am an investor looking to by the security above on day A+B-1 and I have no knowledge of the event that is going to take place on day A+B, I am going to be able to buy those secruties (and thus will sustain a loss on day A+B) regardless of whether someoen out there with insider information is selling her shares. From the perspective of harm to me, how have I been harmed by buying 1000 shares of the security from Insider instead of buying those same 1000 shares from non-Insider? Clearly I have not been harmed, specifically.

The question comes down to this, and I don't personally think there is one right answer to it - do you want a system where only those with inside information trade in specfic securities? See, the harm, if any, to insider trading, is the the market in general. The harm exists, if it exists at all, because billions of shares of securities exist and to sustain a free market in them, general consumer investment is required. A decision was made back in 1933, based on the way public investment woirked in 1933, that consumers of these securties need to feel they were on an even playing field, at least in terms of avilability of information, with every other investor. At that time, it was undoubltably a good call. You needed investement in the markets from teh "little guy" and to get that investment you need him believing he stood a chance.

Since that time, however, people like you and me do not (unless you are very rich or (or possibly and) very stupid) invest directly in corporate equities. Why? Because since 1933 consumer friendly investment vehicles have been created that consistantly outpace, long term, any attempt to create an individual stock portfolio. Today's "little guy" and even those quite a bit bigger, are stupid to invest in anything other than an Wilshire 5000 fund, or some other similar derivative vehicle. The point is, today, investing is 100% safe for the typical investor, because that investor invests in "the market" not in specific corporate securties. Those that do invest in specific corporate securites are in fact, the sorts of people who are likely to have or have access to insider information. And trading amoung those people (or more likely, institutions) is far more efficient than trading among "little guys." So, with the typical small investor investing in the market, immune from insider information, and the heavy instutional investors trading on much better information, we all gain.

But, that said, the law and what would be best for today's markets, are not necessarilly coterminus. So, to answer your question of why she needs to go to jail, the answer is because the law envisions quite sever consequences to the market in general and in the long term, if the public loses faith that they are trading on an "even playing field." While that harm very well may no longer be correct (and in fact, insider trading might actually benefit the markets), preventing the harm is quite important. And people do need to face severe penalties, not just monetary wrist slapping, if the practice is to be discoraged successfully. Again, come to your own conclusions on whether insider trading laws are good policy. But the penalites are quite appropriate given the current assumptions of the law.

miir · Post by **miir** » March 8, 2004, 3:41 pm

this is a petty crime at best with no real victims in my opinion.

Uhhhhh

Midnyte_Ragebringer · Post by **Midnyte_Ragebringer** » March 8, 2004, 3:59 pm

What's funny is if this was an atypical White dude who did this, no one would say boo. They would be happy as hell that another white guy got strung up. Because it's a woman all of the sudden there are no victims? and it ok?

Dregor Thule · Post by **Dregor Thule** » March 8, 2004, 4:28 pm

I think it's more the celebrity that has made it far bigger than it actually is, not her gender. If it had been some nobody pencil pusher (male or female) then it probably wouldn't have even been an issue.

Aaeamdar · Post by **Aaeamdar** » March 8, 2004, 5:03 pm

Some nobody pencil pusher would not have fabricated a web of lies to protect the value of stock that relied heavily on their public image and thus would never have been prosecuted for obstruction and conspiracy.

Keverian FireCry · Post by **Keverian FireCry** » March 8, 2004, 5:59 pm

She had everything and she threw it all away. Greedy bitch deserves whatever sentencing she gets.

Chmee · Post by **Chmee** » March 8, 2004, 6:16 pm

Aaeamdar wrote: There is nothing inherently wrong with being convicted of attempting to cover up a crime that the government could not independantly convict on. In fact, if it were, it would lead to the rather perverse result that if you openly took actions to obstruct justice successfully enough, that you success in covering up your crime also netted you immunity from prosecution for the coverup.

True. However, its not just that they could not convict on it, they haven't even charged her with it. In my opinion she clearly isn't guilty of insider trading and while she may technically guilty of the charges she was convicted on, as Bainbridge in one of the links I provided earlier states they really shouldn't have been brought as a matter of prosecutional discretion.

Frankly, Stewart should consider herself lucky. The judge tossed out the most serious (if most difficult to prove) charge in a rather unconvicing opinion on sufficiency of the evidence. The resulting likely securities fraud conviction had the Judge allowed this to go to a jury would have been a huge. Minimum jail time would have been in the 5 year range, rather than the likely 4 concurrent 1 year sentances she is likely to get.

Well, certainly lucky in the sense that the jury might have found her guilty of that as well.

However the claim that Martha saying she was innocent is securities fraud trying to bolster the stock price of her company is pretty dubious.

Aaeamdar · Post by **Aaeamdar** » March 8, 2004, 6:25 pm

I don't think that is dubious at all. She did not merely proclaim her innocence. That would clearly not be actionable. She publicly stated the same web of lies she gave to the investigators, thus giving the factual basis for her innocence (all of which turned out to be untrue). In a board meeting, she made it quite clear that she understood the possible effects this investigation would hae on the value of MSOL stock and reassured the board of those same lies. Personally, I felt it was the one thing she most deserved being convicted on.

Whether or not the other charges should or should not have been brought, well, Martha is free to argue at her appeal that the prosecution abused their discretion in bringing the charges. I wish her the best of luck should she choose that avenue. Perhaps she can compile statistics of how rich white women are disproportionately prosectuted for this sort of offense.

Chmee · Post by **Chmee** » March 8, 2004, 6:31 pm

Aaeamdar wrote: The question comes down to this, and I don't personally think there is one right answer to it - do you want a system where only those with inside information trade in specfic securities? See, the harm, if any, to insider trading, is the the market in general. The harm exists, if it exists at all, because billions of shares of securities exist and to sustain a free market in them, general consumer investment is required. A decision was made back in 1933, based on the way public investment woirked in 1933, that consumers of these securties need to feel they were on an even playing field, at least in terms of avilability of information, with every other investor. At that time, it was undoubltably a good call. You needed investement in the markets from teh "little guy" and to get that investment you need him believing he stood a chance.

From my reading regarding the issue (granted as a non-lawyer) the even playing field concept has mainly been the one pushed by the SEC, the courts have not been as approving of it. Certainly not in the earlier cases. From the first of the reason articles I linked ...

On appeal, however, the Supreme Court ruled that Chiarella could not have been guilty of securities fraud. His employer worked for the corporate raider, not the target. Chiarella therefore had no duty to shareholders of the target corporation. "Section 10(b) is aptly described as a catchall provision," Justice Lewis Powell wrote for the majority, "but what it catches must be fraud. When an allegation of fraud is based upon nondisclosure, there can be no fraud absent a duty to speak." Chiarella had no such duty, unless the law required all market participants to disclose what they know or to refrain from trading on such information. As Powell noted, "Neither the Congress nor the Commission ever has adopted a parity-of-information rule."

and

The U.S. Court of Appeals for the District of Columbia Circuit upheld the SEC’s action. In a decision that can charitably be described as confused, the D.C. Circuit ruled that the Supreme Court really did not mean what it said in Chiarella. Even though Dirks had no fiduciary responsibility to Equity Funding, the appeals court said, he had an overriding obligation to the SEC and the trading public to disclose the fraud or to refrain from trading.

The Supreme Court, which ruled on Dirks’ appeal in 1983, was not pleased. In unusually blunt language, Justice Powell wrote: "We were explicit in Chiarella in saying that there can be no duty to disclose where the person who had traded on inside information was not [the corporation’s] agent...was not a fiduciary, [and] was not a person in whom the sellers [of the securities] had placed their trust and confidence."

Things appear to get a bit more complicated later, especially with O'Hagan and the misappropriation theory. Even there though the ruling didn't appear to be based around the level playing field concept.

Personally I don't have a big problem with the insider trading laws as they relate to people having a fidicuary responsibility to a company abusing information. I am not sure we really need them. Without them companies could write what restrictions they wanted on the use of company information into their employee contracts and advise potential investors of that and let them decide for themselves. Even with the laws as they exist now though, I don't see Stewart as being guilty of insider trading.

Waksal is pretty clearly guilty of insider trading. He found out the FDA was not going to approve their drug Erbitux and dumped his stock. There is no evidence though that he shared this information with Stewart. In fact there is evidence to the contrary as she left a message for Waksal after selling her stock wanting to know what was going on with it. Her broker violated Merril Lynch's client confidentiality rules in telling Stewart that Waksal had dumped his shares, but that is his problem, not hers.

Aaeamdar · Post by **Aaeamdar** » March 8, 2004, 6:37 pm

She wasn't guilty of insider trading. My response was to Deward who assumed that fact ("I own and trade stock too and I don't think her insider trading screwed me in any way."). My answer was just to explain, generically, what harm insider trading laws are meant to address (e.g. maintianing faith in the market - rightly or wrongly - not correcting specific wrongs to specific investors).

Deward · Post by **Deward** » March 9, 2004, 3:38 pm

Thanks for your reply Aaemdar. I can certainly see your point in that it is important keep faith in the system for the common man (or woman). I also believe that things are a hell of a lot different now though than they were in 1933. With the ease of communications and online trading, the markets are much more stable than they were back then. Also as you mentioned, people don't go out and buy 10000 shares of boeing and expect to retire on it in 20 years. This doesn't mean that I think insider trading should be allowed.

My main point to my previous post is that I don't think this is a crime deserving of jail time. Call me a liberal if you want but I only think violent offenders deserve to be put behind bars. I would also include those white collar criminals whose actions affected other people (Kenneth Lay anyone?). She might be a bitch in real life but her company does employ hundreds (thousands?) of workers and that is good for all of us. Also she was never actually convicted of insider trading and if I was charged with a crime like this then I would make public statements declaring my innocence as well. I am not sure how they can say that is an attempt to boost your stock prices.

Someone also implied that I was making a case about this because she is a woman. I find that argument insulting. Her sex had nothing to do with it and I would feel the same regardless of their sex, race, creed, etc. I do think she was unfairly singled out because of her celebrity status though.

To sum up, I think her punishment should be a very heft high 6 to low 7 figure fine adn strip her of her board memberships in any company. That is a pretty big penalty that could haunt her for years. Jail time should be for those we don't want in society.

Skogen · Post by **Skogen** » March 9, 2004, 4:14 pm

What a dumbass. If she would have come clean right off the bat, she could have gotten away with a 6 figure fine. Instead, she gets caught trying to cover it all up, Now, she is loosing her billion dollar empire.

Chmee · Post by **Chmee** » March 9, 2004, 4:56 pm

Aaeamdar wrote:She wasn't guilty of insider trading. My response was to Deward who assumed that fact ("I own and trade stock too and I don't think her insider trading screwed me in any way."). My answer was just to explain, generically, what harm insider trading laws are meant to address (e.g. maintianing faith in the market - rightly or wrongly - not correcting specific wrongs to specific investors).

That was part of my point though. Yes, the SEC has tried to forward the "level playing field" but the Supreme Court has by and large rejected it. Bainbridge contends that the driving principle behind insider trading laws is because it is a form of theft. The insider information belongs to the company, and taking it and using it for your own purposes is another form of stealing from the company. Not because it is unfair to other investors. Granted, it probably ends up having a fairly similar effect in boosting investor confidence.

Chmee · Post by **Chmee** » March 9, 2004, 5:05 pm

Skogen wrote:What a dumbass. If she would have come clean right off the bat, she could have gotten away with a 6 figure fine. Instead, she gets caught trying to cover it all up, Now, she is loosing her billion dollar empire.

What she really should have done is say nothing (or at least say nothing without extensive consultation with her lawyers). She probably would have gotten off completely free then. Some people are speculating on how much of a chilling effect this will have regarding people's willingness to talk to government agents in investigations.

Aaeamdar · Post by **Aaeamdar** » March 9, 2004, 5:40 pm

Some people are speculating on how much of a chilling effect this will have regarding people's willingness to talk to government agents in investigations.

It should not have any chilling effect, apart from maybe a chilling effect on those inclined to lie, and that can't really be a bad thing.

Deward · Post by **Deward** » March 10, 2004, 2:26 pm

For smart people it has been chilling all along. I will never talk to law enforcement of any kind without having a lawyer present. It is too easy for them to twist your words and find a way to charge you with something whether you are guilty or not. I won't take the chance and no one else should either. As someone else stated, the best thing you can do is just keep your mouth shut.

Aslanna · Post by **Aslanna** » March 10, 2004, 2:32 pm

Deward wrote:For smart people it has been chilling all along. I will never talk to law enforcement of any kind without having a lawyer present. It is too easy for them to twist your words and find a way to charge you with something whether you are guilty or not. I won't take the chance and no one else should either. As someone else stated, the best thing you can do is just keep your mouth shut.

I can usually hold out for awhile. It's when they take that hanging light and shine it in my face that I crack.

Siji · Post by **Siji** » March 10, 2004, 4:26 pm

Aslanna wrote:I can usually hold out for awhile. It's when they take that hanging light and shine it in my face that I crack.

Go to the light, all are welcome in the light..

You said stay away from the light!

Aaaaeeeieiiii!!

Lalanae · Post by **Lalanae** » March 10, 2004, 4:31 pm

Aslanna wrote:
I can usually hold out for awhile. It's when they take that hanging light and shine it in my face that I crack.

Damn, how many times have you been in trouble with the law?

Aaeamdar · Post by **Aaeamdar** » March 11, 2004, 6:26 am

For those interesed, here is a short article on Martha's likely sentance.

http://writ.news.findlaw.com/allenbaugh/20040310.html

Read it. Seemed reasonable and the guy who wrote it is in the top 10 of experts on Federal Sentancing Guidelines. I also think it is pretty accessable reading for non-lawyers.