Martha Stewart (A) Harvard Case Solution & Analysis

Abstract

The case outlines the case of Martha Stewart, who has been accused for using insider information and breaching the SEC polices in order to prevent herself from loss. It basically outlines the understanding of the borderline between personal interest and collective interest and the different treatments under the law.

Since Martha has been unaware of the action of Mr. Waskal, she approved her broker to sell the stocks in the market. Moreover, apart from that, she also put a condition to sell the stocks if the price drops below $60, making the action lawfully right, built since it has a chain connection with the insider information that Mr. Waskal had, and which he presumed to save himself from losses, it has put Martha’s situation under investigation, making her answer the action of selling bulk shares in the market.

Introduction

The case illustrates the ethical dilemma the ImClone System Incorporated established in 1984.Martha Stewart who has substantial shares in the company was found guilty for using insider information and selling the shares before the market crashed. Such is an unethical issue since using insider information for personal benefit is unlawful.

Basically,ImClone System is an oncology care, offering biologic treatment to the patient with different variety of cancers. During the inception of new medicine, the company received an insider news of getting no approval from FDA on the new medicine, hearing that, Sam Waskal, the CEO of the company sold the shares in an attempt to secure himself from losses. On the other part, the broker that liquidated the shares of Waskal, also served Martha Stewart and informed such an action to her as well.

Such information and inclination from the broker to sell the shares made Martha sell the shares as well, seeking profits, however, such an action has been unlawful, which the security commission noticed and called Martha for an investigation.

Martha Stewart (A) Harvard Case Solution & Analysis

The criticality of the case, thus, outlines the undeliberate action of Martha in stock selling which convicted her for breaching of the law. Though it has been mentioned in the rules that she has the right to sell their shares if the price drops below $60, however, the sudden selling and non-disclosure of the action to other partners and breaching the confidence of the other investors puts Martha on the borderline of unethical actions, and ultimately is seen under the law as conviction.

Though unknowingly, the particular case outlines the inclusion of the non-deliberate action of Martha in selling the stocks to refrain from losses, which made her actions culpable under the FDA Law and jurisdiction. It outlines the complex situation and borderline between an unlawful action and unknowingly flanking the borderline of ethics in the stock market.

Problem statement

Martha Steward became unknowingly involved in the unethical activity of selling the company’s share at a bulk amount, knowing the CEO of the company is also selling the shares to refrain from losses.Such information has been offered to her by the broker who has been mutually dealing with the CEO and Martha...............

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