The Martha Stewart Scandal

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Presentation transcript:

The Martha Stewart Scandal and Insider Trading

What is Insider Trading?? When a corporate official or any other insider sells/purchases stock to a company because of confidential information that the public isn’t aware of This information is then used by the stockholder to profit. Not only ethical issue, but illegal.

Martha Stewart Scandal ImClone Systems Erbitux- cancer fighting drug sent to the FDA for approval. Co-founder Sam Waksal received insider information. Dec. 26th Waksal tries to sell his shares as well as his daughter’s shares

Stewart then sold her 3,928 shares of the ImClone stock she owned Dec Stewart then sold her 3,928 shares of the ImClone stock she owned Dec. 27th. Dec. 28th -FDA The next trading day, Dec 31st , ImClone stock fell 18%

Allegations against Stewart Agreement between Stewart and her Stock broker Stewart Charges with nine counts against her. Sentanced to five month in prison.