Word: stewart
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...most controversial charge against her is securities fraud, legal experts say. When the investigation came to light last June, Stewart made several public statements defending her ImClone trade. She denied that she had received any inside information and said she was simply following the $60 sell arrangement she and Bacanovic had discussed. Comey, the U.S. Attorney, said Stewart made these statements "to stop the slide of the stock price" of Martha Stewart Living Omnimedia and deceived shareholders who otherwise would be worried that insider-trading allegations would damage a company built entirely around the image of its namesake. (The stock...
Instead, federal prosecutors are pursuing the claim that Stewart and Bacanovic lied about the trade and faked evidence turned over to prosecutors. The notes Bacanovic made of the portfolio review, for example, include the notation "@60" next to ImClone in blue ink. Prosecutors say that ink is "scientifically distinguishable" from the blue writing on the rest of the page, so it must have been added to bolster the alibi. "That, a jury can understand," says Martin Pollner, a defense lawyer at Loeb & Loeb in New York City. Prosecutors say Stewart altered evidence too. The indictment alleges that she changed...
...officer, rather than company-related conduct, says John K. Carroll, a former securities prosecutor and now managing partner at the law firm Clifford Chance in New York City. While unusual, this charge connects the case to something more than a single stock trade. "It's not just about Martha Stewart's personal fortune," says Robert Mintz of McCarter & English in Newark, N.J. "It's about manipulating the marketplace." The fraud charge also increases the potential prison time; the maximum sentence is 10 years, twice that of the other charges...
Prosecutors acknowledge that with the charges against Stewart they are sending a message to other chief executives. When left unanswered, insider trading "suggests to investors that the game is rigged," says Wayne Carlin, the SEC's northeast regional director. If the SEC wins its case against Stewart, she could be barred from serving on the board of any public company, and her role as an officer of Martha Stewart Living Omnimedia would be limited. Mintz, a former federal prosecutor, says it is an accepted principle of prosecution to use celebrated cases in this way. "There's nothing improper...
...Stewart stepped down as CEO hours after the indictment was announced, but a company representative says her new title, "chief creative officer," only reflects what she has always done in shaping the Martha Stewart television shows, magazine and home products. "It's business as usual," the representative says. Stewart will continue to appear on the TV shows, and the magazine will continue to be animated with scenes from her carefully crafted life of gracious country glamour. At least one expert on branding suggests that this is the opposite of what the company should be doing--steering Martha Stewart the company...