Martha Stewart

Martha Stewart case study

Since this is an ethics course one might ask, did Martha do right or wrong? I can absolutely say that she did some very bad things: alleged insider trading and obstruction of justice. She was tried and convicted for obstruction of justice and she served her time. She should have been thrown in jail. She belongs in the same boat as the Tycos and Enrons, the law is the law and she tried to get away with it. She tried to cover-up evidence in a way by erasing phone logs and concocted a story with her broker on why they sold the stock when they did. Her actions as a CEO and as a human were horrible, despicable and yes very irresponsible. She tarnished her image forever, cost her company jobs and millions of dollars. But the question asked wasn't, "As a CEO did Martha Stewart handle herself responsibly", or "were her actions ethical?" That would be an easy answer absolutely not. But did she handle the indictment responsibly? In the long run yes she did. Her job title was CEO, she was in charge of making the company money and at that she did. Once Martha Stewart started acting on behalf of the company MSO stock went up. However in the beginning Martha wasn't thinking like a CEO she was running scared and her actions in 2002 and 2003 on the way she handled the indictment lost the company and its shareholders lots of money.

In June of 2002 Sam Waksal CEO of ImClone was indicted for insider trading for tipping off friends about his stock, one of those friends was Martha Stewart. Later that month, Martha Stewart issued a statement to the press insisting she had done nothing wrong and protested her innocence. She also gave an explanation for her timely ImClone stock sale. That day her stock jumped 14 percent. By these statements and results one could argue that Martha Stewart as a CEO acted responsibly that day, she made everyone money and she tried to distance herself from Waksal. Unfortunately, she was lying. This was the start of her cover up...