Friday, July 16, 2004

Martha, My Dear!

 Today, Martha Stewart was sentenced to 5 months in prison, 5 month of home confinement, a $30,000 fine, and other punishments for doing what just about anyone with brain cells would have done, given similar circumstances. I'm not a huge Martha Stewart fanatic, but I do recognize that she is an woman of high intellect and is clearly a talented-whatever she is. However, I am and will continue to be supportive of her as far as this particular case.
The prison sentence punctuated a chain of events that began on Dec. 27, 2001, when Stewart, in a brief phone call from a Texas tarmac on her way to a Mexican vacation, sold 3,928 shares of ImClone Systems Inc., a biotechnology company run by her longtime friend Sam Waksal. Prosecutors alleged that Bacanovic (the stock broker), now 42, ordered his assistant to tip Stewart that Waksal was trying to sell his shares. ImClone announced negative news the next day that sent the stock plunging. Stewart saved $51,000.
I am not an expert on these matters, but the way my brain reads into this is that Martha Stewart hired a stock broker for the same reason anyone, even you or I may hire one. The stock brokers job is to find a stock worth buying before it's price is going to rise, then to advise on when best to sell that stock with the intent of maximizing profits. The broker did his job, Martha took the advice that she paid for and then all hell breaks loose. Technically, "insider trading (buying and selling shares of stock or other securities based on special knowledge not available to others, such as information about new products not yet public. -Encarta)" is illegal. However, for as many arguments one can make as to how this could be considered insider trading, I suspect there are as many, perhaps more to support the fact that is was a smart decision based on advice that was paid for; and NOT insider trading. In fact, I've viewed many brokerage and stock advice web sites. On many of them, there is a section actually called "insider trading" which lists companies and "insiders" who plan on either buying or selling large blocks of their company's stock.

Put yourself in the situation. You hire a stockbroker who recommends a stock and you buy shares on that recommendation. At some point after the purchase, the broker calls you and says there is good reason to believe that it's time to lock in your profits, I suspect the stock price may drop. Again, the way I see it, the only decision you have is whether or not to take the advice. Is it fair that you should be liable for how the broker received their information?

What I think is far more serious is the amount of resources this case has consumed (court time, money, press, etc). There are murderers, rapists, drug dealers, pedophiles, child abusers, and other hard criminals running wild in the streets. There are hundreds of young Americans fighting a war that appears to be justified only in the head of our insane President, yet somehow, two years of resources consummate in a prison sentence for a person who simply sold stock for a profit. Even if what she did was illegal, was it necessary for it all to have been as big a deal as it was? When you look at the implications all of this has had on Martha's company, all the press has pounded into our heads is the effect on Martha's net worth (being a considerable shareholder in the venture). In all of their exploitation, I doubt if ever once the media considered how many average Americans own shares in their retirement portfolios and what effect this will all have on them (note to press, this is not the same thing as Enron). Let it go on record that under the same circumstances, I would have done, and will do in the future should the scenario arise, the exact same thing as Martha Stewart did.

Perhaps the only people that may win in this case, should Stewart serve her sentence, are the other prisoners. On the news last evening, they mentioned that it is typical for a new prisoner to be assigned kitchen duty as their initial assignment. If this is the case, those prisoners will be eating better than they probably ever have.
Martha, my prayers and thoughts are with you.

Until next time, May God Bless You All.

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