Its headquarters is in New York and it employs approximately 760 people with annual turnover of $327. 9 million dollars (Martha-Stewart-Living-Omnimedia,-Inc. ). Martha Stewart achieved her fame because she was able to reach the masses. She managed it through her affordable product line along with lot of common sense. Her television shows gained popularity in the U. S. A. MSLO earned good revenues through her magazine sales. It appears that Americans took pride in having Stewart’s products — whether they are for decorating the home or used in their yard.
This demonstrates MSLO’s popularity in the U. S. A. Any company’s mission statement is reflected in its business culture. The mission statement of Martha Stewart’s MSLO is: “Martha Stewart Living enriches the everyday lives of women with a sense of pride, creativity, and how-to confidence. Our relationship is comprised of dreamers and doers– those who aspire to a more beautiful life and those who are actively in pursuit of one, in ways big and small. We provide both the tools and inspiration they need to elevate their quality-of-life.
Martha Stewart Living sharpens their senses to the world around them, trains them to see the potential of beauty in their surroundings, and helps them establish a distinctive signature style to enhance their world” (Martha Stewart Living Omnimedia, Inc. , 2010). It appears that MSLO’s culture is very vibrant and focuses on having a stylish and meaningful life. Martha Stewart’s values reflect on MSLO’s culture. Those are: •Pursue your purpose with passion. •Practice solid values. •Lead with your heart as well as your head. •Establish connected relationships.
Unfortunately Martha Stewart, an American home decorator icon, was convicted of conspiracy, making false statements, and obstruction to an agency proceeding. On December 27, 2001, Sam Waksal, the key shareholder in ImClone, ordered his broker, Peter Bacanovic to sell all his stock in the company. Bacanovic was also Martha Stewart’s broker and told his assistant to phone Stewart. The assistant left Stewart a message about Waksal’s sales (insider information), suggesting she might do the same. Martha Stewart called Bacanovic back and ordered him to sell her entire holding of ImClone’s 3,928 shares.
The sale took place on December 27, 2001 (Fox News, Martha Stewart timeline, 2005). “ImClone stock plummeted and Waksal was investigated. The SEC learned of Stewart’s sale, and called Stewart to a formal interview. Before the interview, Stewart and Peter Bacanovic conspired. Rather than admitting that Bacanovic gave Stewart an inside tip, they invented a story of a “standing sell order. ” Stewart gave this story to the government in formal interviews. After a lengthy investigation, Stewart was found guilty by the court on various charges on June 4, 2002, although not for insider trading. ” (AcaDemon term papers and essays).
Obviously, Martha Stewart was engaged in this unethical and illegal behavior along with her broker Peter Bacanovic. Selling shares was just a onetime incident on December 27, 2001. “Martha Stewart was tried in U. S. District court. On June 4, 2003, James B. Comey the United States Attorney of the Southern District of New York, and Kevin P. Donovan, the Assistant Director in Charge of New York Office of the Federal Bureau of Investigation, announced the filing in Manhattan Federal court of indictment charging Martha Stewart, chief executive officer of Martha Stewart Living Omnimedia, Inc. and Peter Bacanovic, a former securities broker at Merrill Lynch & Co. , Inc. , with conspiracy, obstruction of justice, and making false statements to federal agents. The indictment separately charged Stewart with securities fraud in connection with her artificial manipulation of the price of MSLO common stock” (Justice Government Press Release, 2003). The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty (Custom edition for Indiana Wesleyan University. 2007. p. 230).
The defendants filed a motion for a new trial, alleging that expert witness Lawrence F. Stewart, director of the Forensic Services Division of the United States Secret Service, had committed perjury in his testimony on behalf of the prosecution. Motion for new trial was denied by the court on the basis that defendants cannot escape the fact that the jury acquitted both defendants of making false statements relating to the existence of the $60 agreement, and the fact that ample evidence supports the charges (Custom edition for Indiana Wesleyan University. 2007. p. 42). Stewart did not enter into a plea bargaining agreement.
A plea bargain is an agreement in which the accused admits to a lesser crime than charged. In return, the government agrees to impose a lesser sentence than might have been obtained had the case gone to trial. This saves costs, avoids risks of trial, and reduces the burden on the prisons (Custom edition for Indiana Wesleyan University. 2007. p. 231). Defendants Martha Stewart and Peter Bacanovic were both convicted of conspiracy, making false statements, and obstruction of an agency proceeding. A jury panel of eight women and four men found Stewart guilty on all four counts.
Stewart did not appeal. The conviction came exactly one week after U. S. District Judge Miriam Goldman Cedarbaum threw out the most serious charge against Stewart, securities fraud which carried a maximum penalty of 10 years in prison and a $1 million fine (Kellman). STEWART’S CRIMINAL INTENT AND CRIMINAL ACT Martha Stewart had mens rea and actus reus. Mens rea is a criminal intent when an act was committed. Actus reus refers to the actual performance of an act. Stewart was charged with insider trading (Custom edition for Indiana Wesleyan University. 2007. pg. 227-228).
She gave public statements saying she was not involved in such activity. Her intention may have been to defend herself and tell general public the truth. Government prosecutors became creative. They did not pursue their charge for insider trading but charged her with mens rea — her criminal intent was to keep the MSLO stock price stable in the stock market. Later, Stewart corroborated the story that she already had a standing order with her broker to sell ImClone stock once it reached $60. She tried to falsify her trading records. Here she had actus reus. Brief time line of key trial events: On June 4, 2003, Stewart resigned as chairman and CEO of Martha Stewart Living Omnimedia Inc. hours after she was indicted on obstruction of justice charges. -On March 5, 2004, Stewart was found guilty of conspiracy, making false statements and obstruction of justice. The charges carried up to 20 years in prison. -On July 16, 2004, U. S. District Court Judge Miriam Goldman Cedarbaum sentenced Stewart to five months in prison, five months of home confinement and fined her $30,000. She was spared an immediate trip to federal prison as the judge stayed her sentence pending appeal. On October 8, 2004, Stewart slipped into Alderson Federal Womens’s prison in West Virginia in the early morning hours and began serving her five-month sentence. -On March 4, 2005, Stewart was released from Alderson in the early morning hours and arrived back at her multimillion dollar 153 acre New York estate to begin serving the five-month home detention portion of her sentence (Fox News, Martha Stewart timeline, 2005). CONSTITUTIONAL RIGHTS The Constitution protects the rights of the people from unreasonable search and seizure by the government (Custom edition for Indiana Wesleyan University. 2007. p. 241).
Stewart was a criminal defendant. Sixth Amendment was her second option. These rights mainly give rights to confront the witnesses against accused and have a speedy trial. IMPACT ON AMERICAN PEOPLE Martha Stewart was a successful businesswoman. She not only influenced lot of American people but improved their quality of life. Americans were shocked to learn that Stewart was charged with criminal fraud. Her ImClone stock transaction saved her approximately $45,000. This is a small sum of money compared to multi-billion dollar white-collar crime cases, as well as in relation to her wealth (in the hundreds of millions).
It is important to note that ordinary shareholders incurred sizeable losses by purchasing Stewart’s dumped stocks. Celebrities like Martha Stewart are always in the limelight. Illegal acts committed by them instantly become public news (Heminway). PSYCHOLOGY BEHIND STEWART’S ILLEGAL ACT Going back several years in Stewart’s life, one notices that she is a daughter of Polish immigrants. She worked as a stock broker in her earlier career. Whether Stewart’s decision to sell ImClone stocks was either an impulse decision or a calculated move to cut losses will be difficult to determine.
Everyone makes mistakes in life but we avoid making blunders. Sometimes personal success, wealth, and ego make a person feel that he or she is invincible. Even though she was a multimillionaire, greed compelled her to commit an illegal act. Stewart has a very positive mindset. She is more of a leader than a manager. She believed that MSLO will prosper in the near future. She had courage to overcome challenging circumstances. Stewart had faith in her heart that success is not too far if she sticks with core business values and maintains the quality of MSLO’s products. ETHICS AND SOCIAL RESPONSIBILITY
Ethics and social responsibility are an integral part of any individual’s life. They fit like a hand in a glove. They should be followed strictly not only by individuals but also by company personnel. Both of these terms are very subjective. Any activity is considered ethically correct or good when it is differentiated by incorrect or bad behavior or conduct. Milton Friedman strongly recommended that businesses should solely operate for profit. In my professional opinion, individuals as well as corporations owe their society. A corporation donating money to the local charity or church is an example of social responsibility.
It adds value to mankind’s quality of life. Martha Stewart sold ImClone’s stocks based on inside information to reduce her losses; it was an unethical act. She conveniently ignored her social responsibility. She did not think of the other stock holders who suffered loss because of her action. It would be interesting to analyze Stewart’s act in light of three theories of ethics. These theories are: •Consequential theory •Deontological theory and •Humanist theory (Custom edition for Indiana Wesleyan University. 2007. p. 89). All of these theories revolve around good or bad behavior.
Consequential theory, as its name suggests, is based on the consequences of the act in question. Deontological theory analyzes behavior based on set rules and principles which a citizen should follow. Humanist theory focuses on the good qualities and applying mind during instinctive behavior. Sadly, Stewart failed miserably if one applies these theories to her act of ‘sale of ImClone stocks’. She did not restrain herself from selling the stocks based on inside information. She neither applied the rules which are set in such a situation nor thought of the consequences of her action.
In Stewart’s case, humanist theory applies to her unethical behavior most. Honesty is a very important virtue. She did not use self-restraint when she quickly made the decision to sell the stocks. She lied to the Federal Court. If she had told the truth upfront, she would have saved herself from all the embarrassment. Let me attempt to evaluate Stewart’s actions in terms of five schools of social responsibility. These are: 1. Profit-Oriented school– Only goal is to make profit. 2. Managerial school– Corporations deal with people at large. 3. Institutional school– Deeds should help society. . Professional obligation school– Top tier of the company owes to public welfare. 5. Regulation school– Onus is on businesses to be responsible for actions. (Custom edition for Indiana Wesleyan University. 2007. p. 98). It is obvious from the above brief description that Martha Stewart is from the ‘Profit-Oriented’ school. She acted recklessly to reduce her losses to maintain the profits. MY OPINION Martha’s behavior is understandable. One should not forget that Stewart is a human being. A real life example will prove my point. Once in the middle of the night, a car was following me.
I got scared and started speeding thinking he was a shady person. The driver turned out to be a police officer but did not give me a ticket when I explained my position. Stewart, although successfully defended her from insider trading charges, was prosecuted for other crimes. Considering Stewart’s reputation, she should have used her poise, status, and considered the impact of her actions on her and on the general public. Celebrities’ minor mistakes and blunders become news and it is usually blown out of proportion. Martha, being a smart woman, was most certainly aware of this. From this perspective, Stewart’s behavior is ifficult to understand. In my professional opinion the sentence is fair. Martha Stewart is characterized by egoism philosophy, where right or acceptable behavior is defined in terms of maximizing personal wealth. Martha’s actions were purely out of selfishness. She sold the stocks thinking it was fair and acceptable to avoid personal losses. She did not bother to warn the shareholders about the upcoming losses. She bluntly did not care about the shareholders bearing losses as long as she was not losing. With this is mind, the sentence she received is not too harsh and fair enough to warn other greedy people.
With this said, I also think and believe that Stewart acted on the information from her broker which she was not entitled to. One should not forget, however, that she did not ask for the information. Hence Stewart did engage in common business behavior. Attorneys should have stopped chasing her once they knew that they could not convict her for insider trading. In reality, I think she was simply a scapegoat. In business, a person has to be completely ethical. Ninety-nine good deeds are forgotten at the cost of one bad deed. That is human nature.
To build one’s reputation again, one has to really work hard, with no guarantee that his or her image will be renewed in the public’s eyes. Martha is gaining popularity again. Recently she was on Donald Trump’s popular show, The Apprentice. Business leaders will surely think of Martha Stewart if they ever are tempted to sell stocks to avoid losses, especially since she went through a lot of unpleasant things, such as serving jail term, house arrest, and losing approximately 250 million dollars of her personal fortune. Martha Stewart’s case is really different from other criminal cases like WorldCom, Enron, or Tyco.
Stewart’s wanting to sell the stock was a very personal decision and the US attorneys were successful in trapping her to make mistakes out of fear. In my opinion, this case will not provoke more government regulations and controls. Corporate whistle blowers are not an issue in this case. Bacanovic’s assistant, Douglas Faneuil who told Stewart of Waksal’s activity, reached a plea bargain with the government and became a witness (Custom edition for Indiana Wesleyan University. 2007. P. 229). I do not consider him to be a whistle blower. The first step to learn ethics and social responsibility is at home.
Mistakes in life are acceptable; we learn from them and try our best not to commit those again. Blunders are so obvious that one can stay away from them and not commit them at all. In the business world, chances are higher that, when a blunder is committed, it is most probably illegal. Anything illegal has dire consequences. Illegal activity surfaces for sure. Until it comes to public knowledge, that person leaves in fear. So my recommendation is do noble things which are helpful to society. Make sure that you have a very clear conscious. Accept mistakes and be humble.