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General discussion

This just in: Martha guilty on all charges. nt

Mar 5, 2004 4:12AM PST

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Discussion is locked

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Socialism?
Mar 6, 2004 2:24AM PST

Capital makes no contribution to the production of goods and services, and a return on capital is not deserved. Those ideas lead to real nirvana in the USSR didn't they? What a joke! How much capital does it takes to build a microelectonic fabrication facility? How many of these devices can labor alone build? Zero! People who pay for these facilities have a right to profit from their investment. We're all better off as a result.

Equal and fair access to information IS impossible. No one I know says it is. Equal and fair access has NEVER been the goal! Equal opportunity is the goal. If you invest the time and money to unearth publicly available information, you will have more information than the person who doesn't. If you risk your money on an investment, and win, that's an honorable thing. Everyone benefits if you do that. Whether or not you 'earned' the money is pure semantics.

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Re:Socialism?
Mar 6, 2004 3:47AM PST
"Whether or not you 'earned' the money is pure semantics." --- Would you like gravy with those semantics, Sire?

Hi Kiddpeat,

The Darwinism that does exist among the players in the market is clearly skewed near vertical. Did you hear that Warren Buffett made 17 thousand million dollars profit LAST YEAR? Does all of that reflect his efforts alone and therefor is his due? He was able to do this only as a result of society's efforts. And more specifically, labor's. There's not much balance there if you ask me. Used to be, the progressive income tax...

I think the warts are bigger than the frog. First you got'a buy into the questionable idea that there is (or ever could possibly be) some semblance of, as you said, "equal opportunity" to equal and fair access to information, but given all that, yes, basically I agree - "If you risk your money on an investment, and win, that's an honorable thing." Society ought to let you keep some part of your winnings.

Our accomplishments are more a result of the hive than individual effectiveness.
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That's sheer nonsense!
Mar 6, 2004 4:55AM PST

How do you know Buffet made his money based on labor? Have you studied the details of his investments? What if he's invested in something that's totally automated? It's simply irrelevant HOW MUCH money he made. The more relevant question is how much he has invested. As far as society is concerned, we're all dependent on what everyone else puts into it. We are all, also, rewarded for what we put into it. Those who put more in, get more reward. Those who contribute a lot of value, get a lot of reward. BTW, I think Buffet agrees with you. He thinks that taxes should be higher. That's his privilege, but it's an opinion I don't share.

Bill Gates dropped out of Harvard to work on an obscure, puny technology because he was prepared and saw the possibilities that other people did not see. Later he bet his company on a fledging technology that was largely ridiculed (and still is). It delivered a LOT of value, and he was rewarded commensurately. Both Bill and a LOT of his employees made a lot of money, but our society made a lot more. Therefore, we're all much better off because Gates took the risk. He DESERVES his reward.

As far as equal opportunity for access to information, that's what the law is all about and why it's seriously enforced. Sure, it's human nature to try to cheat, but you can't fault the system when it is diligent in enforcing the law and a lot of people exert a lot of effort to make it work. It's the best system so far devised, and generally works pretty well.

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Re:That's sheer nonsense!
Mar 6, 2004 11:40AM PST

Nothing succeeds like success and it's tough taking the side of an issue that apparently opposes it. We have our prejudices, and the band-aids have been on capitalism so long that we assume the boo-boo's they're covering up are all better now. Insider trading is, was and ever will be a huge, shades of gray, boil on it's ***. One of many. Enforcing the laws about it is a joke and a big wink. There just AIN'T enough jails. And to tell the truth (?), we like it that way.

I'm still a real skeptic, and I'm not disappointed on a pretty regular basis. Poor poor Martha. Sacrificed to the myth of equal opportunity for access to information. She may even get the same sentence as a shoplifter.

As to labor vs. capital... a rain check. Okay?

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Isn't "sheer nonsense" a pantyhose? I'm sure Martha has some other uses for them.[nt]
Mar 6, 2004 3:19PM PST

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:-) - NT
Mar 6, 2004 3:32PM PST

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She should get what anyone else gets for insider trading and lying
Mar 6, 2004 12:14AM PST

to the SEC as well as subborning perjury (I'm not sure what the charges were, but that sounds about right). The amount of her ill gotten gain is irrelevant. She stole money from other investors.

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She was convicted ...
Mar 6, 2004 12:28AM PST

... of lying to investigators, conspiracy and obstruction. All the "coverup". She was never charged with the crime of insider trading. The dropped charge was the bizarre one where she was accused of manipulating HER stock price by proclaiming her innocence.

What a witchhunt IMO.

Evie Happy

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Evie, I've still got to disagree.
Mar 6, 2004 12:48AM PST

Obviously, at the bottom of what she did, was inside info. Yes, she wasn't charged because it apparently didn't come directly from Imclone. However, she probably would have had to give up her gain if they found she acted with inside info which she did. The absolutely DUMB thing was lying about it to the SEC.

Actually, I think she was guilty on the charge regarding her own stock. Her stock's price was dependent on HER integrity and reputation. She had inside information that she was guilty of acting on inside information, but mislead her investors in an attempt to support her stock price. I'm puzzled by why the judge threw that charge out.

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Re:Evie, I've still got to disagree.
Mar 6, 2004 1:11AM PST

Hi KP,

So it wasn't insider trading. The other charge was ridiculous on its face AFAIC. Look, I'm no Martha fan, but I do feel she has been prosecuted far more aggressively than she might otherwise been had she been Jane Smith. Look at the cries to string her up from her toenails to make an example of her. That's not what justice is about.

She was STUPID beyond all belief to lie and try to cover things up. But I don't think they hang people for being stupid. She is in a particular situation being that her brand is so tied to her reputation. But that is also a risk that investors should be aware of don't you think? It was all fine and dandy for investors to profit from her success, but they knew all along what they were getting into.

Evie Happy

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Knowing what you're getting into, Evie...
Mar 6, 2004 1:41AM PST

Evie, you hit the nail on the head when you said, "but they knew all along what they were getting into.".
She was not an ordinary Jane Smith, who probabally would have taken a "slap on the wrist" deal.
No, Martha chose to gather her legal reps and spend what would be to an ordinary person would be a small fortune trying to get off totally Scott-free. She stepped up to the green felt table in the casino of the courts and rolled the dice in what turned out to be an "all or nothing" roll that came up snake eyes. She tried to get "nothing" in that gamble, and it came up "All", so she loses her wager and the court will collect it.

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I think you're right.
Mar 6, 2004 2:39AM PST

She probably WAS prosecuted more aggressively than Jane Smith. J. makes some excellent points on that subject. Is that justice? Absolutely! IMO, you're confusing justice with mercy. Justice dictates prosecution for breaking the law. Mercy says give her a break just like Jane Smith. Mercy is not required to have justice. It is optional. Actually, I was afraid she would get off with a slap. I'm glad she didn't because it shows that justice is being pursued.

I think the feds do go harder on high profile people. They must get respect from some very powerful, wealthy people. They must make the point that you need to fear them if you break the law. That's important to make the rule of law work.

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Hi Evie
Mar 6, 2004 5:08AM PST

I see your point on the industry, and will defer to your knowledge. Was it illegal to communicate info to the company? Maybe Waksal (sp?) had an inside source. Seems like that should be pursued, but was perhaps an innocent error.

I still think the Feds need to be vigorous in high profile cases to drive home the point on consequences. I understand you think it's unfair, but how do you respond to J's point that Martha chose her course? Once caught, she should have come clean and probably had the opportunity to do so. We may never know that.

BTW, I have great respect for your posts, and usually agree with you. Happy

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Re:Hi Evie
Mar 6, 2004 9:54PM PST

Thanks for bringing this back Happy

TTBOMK, here's what went down. Leak from FDA was to Waksyl who then got on the horn with his daughter(s) who were also heavily invested in ImClone. They all started selling. Martha's broker was either the same as Waksyl's or knew him, and called her up to tell her Sam was selling. She sold her stock.

I think it is very important that she wasn't charged for anything actually relating to that sale. IOW, she broke no law in doing so, or she would have been charged. All the evidence brought to show how she "conspired" would have supported that charge.

I think she panicked. She sold the stock on impulse, as anyone would facing a loss of over a hundred thousand dollars. I repeat that it is easy for us to look from the outside and think that someone of her wealth shouldn't have worried about such a "small" loss, that she was greedy to act on the knowledge that she would otherwise lose a large sum. She got swept into Waksyl's net on the insider trading deal so wanted to disguise any appearance of impropriety of her trade. She was WRONG WRONG WRONG. She should have been fined, thrown off the NYSE, whatever. OK, she tampered with evidence, but evidence of what? They have the phone logs. They know the timeline and what really happened with the sale. They brought no charges on that because she broke no law.

The juror that first spoke out mentioned that she was wrong to do that trade. This tells me that the jury couldn't separate out the fact that she wasn't even charged with anything pertaining to the initial event.

I think the Feds have an obligation to prosecute high profile cases according to the same standard as they do for any plain Jane. This one stinks to high hell of witch hunt and covering their butts. The reaction pretty much says it all to me. Too many people seem to be taking extra glee in her demise and wish to see her treated more harshly because she was successful, famous, rich and powerful. Class envy and scapegoating. Even the prosecutors comments on conviction tried to tie her actions into what Enron and WorldCom did, and it bears absolutely no resemblence.

Thanks for the kind works KP, and the feeling is mutual. We can agree to disagree on occasion Happy

Right now they are reporting that up to 90% of Martha's wealth is tied to stock in her company. Over the past few days she has gained and lost millions "on paper". What now? She is in a Catch-22. If she sells her stock to cut some losses she's sunk. If she holds onto it, she's probably double sunk.

Evie Happy

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Re:Re:Hi Evie - Part 2
Mar 7, 2004 12:02PM PST
entered into a binding contract to purchase or sell the security in the amount, at the price, and on the date that the person purchased or sold the security;

provided instructions to another person to execute a purchase or sale of the security for the instructing person''s account, in the amount, at the price, and on the date that the purchase or sale was executed;

adopted, and had previously adhered to, a written plan specifying purchases or sales of the security in the amounts, and at the prices, and on the dates at which the person purchased or sold the security; or

adopted, and had previously adhered to, a written plan for trading securities that is designed to track or correspond to a market index, market segment, or group of securities, and the amounts, prices, and timing of the purchases or sales actually made were the result of following the previously adopted plan.
'

Thus, Martha's lie was aimed at an inside trading defense. The question is why she wasn't charged as her actions fit the definition. Maybe that was the mercy in this case, or maybe they wanted to prove the lie first. Hard to tell.
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Waksyl had inside info
Mar 7, 2004 8:27PM PST

Stewart knowing that Waksyl was selling his stock wasn't technically "insider" information. Sorry, I can't buy that these prosecutors ever had mercy on their minds. If they had the facts to prove insider trading she would have been charged with such. There is no other explanation for that cooked up charge of fraud that the judge rightly threw out.

Listen to the jurors who are now speaking out. This is all about her perceived arrogance, a thought in the back of their minds that the trade was wrong and class envy to send a message and stick up for the little guy. They didn't like celebs showing up in court, but those are her friends!

Too bad. Bringing Martha down for this has and never had anything to do with the book cooking, profit inventing, tax sheltering shenanigans of the World Coms and Enrons of this world. All this will do is destroy a few more fortunes and perhaps put a final nail in the KMart coffin. There are apparently many who will have a chuckle at her expense, and it seems some who are petty (yes I think it is petty) enough to feel a sense of personal satisfaction and glee to see someone of her stature/success brought down.

Evie Happy

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Lying insider tips. In your research...
Mar 8, 2004 1:27AM PST

...did you find anything concerning insiders that give incorrect "insider information" to someone who then trades using that incorrect information and loses money because of it? Any remedy? Are they prosecuted for correct insider information and not for incorrect or deliberate misleading "insider information"? Does fraud have to be proved and does that need to involve the incorrect information providing some tangible return to the person giving the incorrect "insider information"?

My opinion is they need to restrict the "insider information" penalties to large stockholders and officers of a company.

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Re:Waksyl had inside info
Mar 8, 2004 1:01AM PST

Selling stock because you track another investor and sell when they do, is not a crime.

Selling stock because your broker calls and says he thinks it would be a good idea, isn't a crime.

If you have a sell target price, then even if some insider information has been leaked, it's not a crime for that contract to be executed if the stock had dropped to that level.

Selling a stock because an approval process before some government regulatory agency seems to be taking longer than is normal for most successful product approvals in past, isn't insider information, nor illegal.

Checking SEC filings and discovering large upcoming stock sales by company execs and taking a chance that means bad news, so then selling the stock is not a crime.

I don't understand why Martha didn't just tell them she was told by her broker he felt uneasy about the stock and therefore she sold it, but not for any specific reason he had given, other than she trusted in his business acumen in that matter and didn't have time with her other busy schedule to spend time second guessing his advice to sell.

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Re: She was convicted ...
Mar 6, 2004 12:53AM PST

Hi, Evie.

Martha's problem is that she clearly knew better but let her greed get the best of her. She was a former stockbroker, and at the time of the incident was on the Board of the NYSE. Thus, unlike many people, she couldn't claim she didn't realize it was wrong. Also, as with Watergate, what really got her into trouble wasn't the initial crime -- had she fessed up and given then money back, I doubt she'd have been charged. But her greed and ego wouldn't let her do that -- truly a Greek tragedy, in which a great person is laid low by a fatal character flaw.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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You're not telling me anything ...
Mar 6, 2004 1:13AM PST

... I don't already know. I think she made a stupid impulsive decision and paid more dearly many times over for the coverup that ensued.

I'm no big fan, nor do I condone her behavior. My beef is with what I see as an overly aggressive prosecution. In effect, she has been found guilty of trying to coverup for a crime she was not even charged with let alone found guilty of. That's not very usual.

Evie Happy

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Would that mean, Evie...
Mar 6, 2004 1:56AM PST

Evie, would that mean that when somebody knew that they were in trouble, had their people "strip the files" and run the evidence thru a shredder, they should not be charged with obstruction if the destruction of evidence were successful and prevented the prosecution of the original charge?

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Re:Would that mean, Evie...
Mar 6, 2004 3:41AM PST

Somewhat different here J, because whatever she did to "coverup" didn't effect the ability of prosecutors to bring charges on insider trading. They just didn't have the facts on their side to ever support such a charge! Waksyl, yes, Stewart, no, or they would have brought them and not cooked up that idiotic fraud charge. Really now, if I had owned Martha stock when this started, her claiming innocence would not have influenced my decision on whether to hold or sell her stock.

Evie Happy

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Not at all, Evie...
Mar 6, 2004 7:14AM PST

Not at all, Evie. If I committed a crime and did something like intimidating the witness so that the prosecution was stopped for lack of witness who would testify, they could still go after me for other charges that they had. (or that intimidation, if they could prove it)
If I had tampered with a jury and gotten off, I could still be nailed for that tampering. Martha counted on at least one juror who would not find her guilty just because she was Martha Stewart, so she gambled. When the jury came back in, she lost, and now must pay for her bet.

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The question that should be asked is;
Mar 6, 2004 3:41PM PST

Was she actually tried before a jury of her peers? What really constitutes "peers"? I'm curious, do we have any statistics on the jury as to racial makeup, income levels, blue or white color workers, housewives? My historical impression of what inspired the concept of "jury by peers" is to move away from having commoners under English law tried by a council or jury of noblemen or wealthy merchant class. Also a nobleman wouldn't have been on trial before a jury of commoners, since they were not his "peers". Class envy can be an ugly thing to face in a jury. So, do we know the makeup of this particular jury?

How many think Martha Stewart's attorney was very competent? Maybe when I saw him he was tired, but he seemed to have problems expressing himself. I got the quick impression (possibly not accurate) that he wasn't a fireball of an attorney.

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But that's my point J ...
Mar 6, 2004 9:34PM PST

... and one I think Paul is asking about lower down in this thread. It's like perjury has to be about some material part of a case. Whatever coverup or "obstruction" did not interfere with their ability to bring the insider trading charges which was the initial charge. Even with the charges brought, it seems that the conspiracy and false statements were add-ons to support that "most serious" charge of fraud that was thrown out by the judge. Without any evidence to support a crime being committed, it seems that whatever she did to cover up an appearance of impropriety is no longer material. The big thing apparently was trying to get everyone on the same page as to that stop-loss order and/or calls to the broker. Well, that evidence was presented in this case, why was it not presented in a case of insider trading? Because she never did anything of that sort! The more I think about it, I don't think she did anything wrong wrt the stock sale in the first place. Come on, she was a friend of Waksyl's, but it wasn't even Waksyl that tipped her off. He acted on insider info. Her broker merely alerted her that he was selling. If I owned ImClone and my broker told me Waksyl was selling I would be selling too! I believe that what the broker did was illegal. I don't think her acting on this information from him was. I seem to have the prosecutors on my side with this, because the evidence pretty clearly points to what happened and yet she was never charged with any crime that actually related to the stock sale.

Your point on her gamble is well taken. I'm not saying she should be treated any differently at this point. She gambled on the jury and lost. I just don't think she should have been before one to begin with. JMO.

Evie Happy

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Your first half is almost exactly what my wife said too. It's like still being forced to pay sales tax on something returned, but worse.
Mar 6, 2004 9:56PM PST

If the basis on which something is charged has been removed, then anything attached to it should also disappear. It comes back to the question of should an innocent person wrongly charged be further prosecuted, having known they were innocent, for having tried to escape conviction on such charges. Another way of looking at it, should the person be prosecuted for having lied about charges that themself were a lie. Should the government lay a lying charge against you, then prosecute you for lying in an effort to escape their original lies?