Founder of well-known media and homemaking empire

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Reference no: EM131636160

Martha Stewart, founder of a well-known media and homemaking empire, was charged with intentionally deceiving investors based on public statements she made. In 2001, Stewart's stockbroker allegedly had informed Stewart that the head of ImClone Systens, Inc., was selling his shares in that company. Stewart then sold her ImClone shares. The next day, ImClone announced that the U.S. Food and Drug Administration had not approved Erbitux, an experimental cancer drug that the company was developing. After the government began investigating Stewart's ImClone trades, she publicly stated that she had previously instructed her stockbroker to sell her ImClone stock if the price fell to $60 a share. The government prosecutor claimed that this statement was false and that Stewart made it with the intent to deceive investors in her own corporation, Martha Stewart Living, Omnimedia, Inc. by offering an explanation for the stock sale. The court, however, acquitted Stewart on this charge because "to find the essential element of criminal intent beyond a reasonable doubt , a rational juror would have to speculate. With this case in mind, what laws were violated and what ethical responsibility does a chief operating officer have to their shareholders?

Reference no: EM131636160

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