Professional Documents
Culture Documents
Students:
Introduction:
Fraud, lying, conspiracy...not terms that any individual generally wants
associated with their history, nonetheless with their reputation and
personality; especially if that individual happens to be Martha Stewart.
Martha Stewart: a name which almost every person who calls themselves an
American can recognize. Her name pronounces itself across cookbooks,
magazines and even has its own show on Style and The Learning Channel. It
now pronounces itself with yet another captivating theme, as part of one of
America's major scandals.
The high profile nature of the Martha Stewart insider trading case led to
abundant research and writing by academic and media professionals. In this
presentation we seek to discuss the central moral and ethical issues
surrounding the case. In addition, the greater issue of insider trading will be
examined and moral foundations for the issue will be established and
discussed. Finally, the presentation will conclude with a suggestion for the
most consistent ethical approach to insider trading.
• Background:
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company stock and that it would be in her financial interest to follow suit by
selling off her own shares of the company, which totaled almost 4,000
shares.
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engaged in unethical behavior, for which no claim of ignorance would be
credible.
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cashed out their money by selling their stocks before the news broke to the
public.
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Although when looking at the big picture; many people think that the
excessive media has hurt Martha negatively, we, on the other hand, think
that it provided benefits to her in the long run. For example, it benefited her
in increasing the level of famousness. Millions of people are now exposed to
her. The increasing level of exposure via watching her T.V. shows and
passing by her products in shops constantly makes people more curious to
know about Martha. People feed on gossip, especially females –which is the
original targeted market for Martha- the more they talk about her, and the
more she is mentioned or attacked by the media; the more people want to
know more about her. The media is helping her profit in an indirect way. An
average person who walks the street and sees a poster of Martha in hand
cuffs will start looking for more information about her, the people who have
never heard of her will start surfing the internet to read her blogs or fan
pages or even decide to buy one of her products. Another scenario would be
watching her T.V shows and getting her recipes, with the effect of the media;
Martha Stewart are gaining new fans every day. Furthermore, with an
informal collaboration with the media; K-mart has chosen to sell Martha
Stewart’s embattled company, and has extended their agreement for two
years.
• Martha’s Sentence:
Insider trading punishments are usually on par with street crime penalties
even though it does not include physical violation actions. The person can be
fined, banned from sitting on the executive or board of directors of a public
company and even jailed depending in the situation. In the case of Martha
Stewart, she was convicted of conspiracy and obstruction of justice in an
insider stock trading case in 2004 and her punishment was five-month jail
sentence, five-month house arrest, two years' probation and a $30,000 fine.
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Martha Stewart's five-month jail sentence was too lenient. It has been
realized that a celebrity, a wealthy businessperson, or a political leader can
get off more easily and due to their ability to pay the jail-out, they usually do
not get the suffering they should feel an deserve in the prison life, instead
they pay the fine demanded and exchange the small stiff cell bed in jail for a
$10,000 cushion at the privacy and safety of their own home while watching
their favorite T.V show and having an expensive snack. Usually there is a
concern that the justice system may be unfair to the poor who have fewer
resources, therefore, they cannot protect themselves nor defend themselves
like wealthy criminals. Since white collar crime -insider trading- tends to
occur among those of higher socio-economic standing, they can afford a
better lawyer to argue in their defense.
Because she is famous, Martha Stewart was able to get the most lenient
sentence that normal people could not receive it if they were convicted of
the same crime. Usually judges are inflexible and strict with white collar
crimes especially after the multiple financial scandals -such as the case of
Enron and Arthur Anderson- but that did not occur in Martha Stewart’s case.
The judge Miriam Goldman Cedarbaum was sympathetic with Martha since
she helped people outside her family. The judge was not being fair to the
stakeholders in her leniency. Cedabaum respects social responsibility and
since Martha is an active member in the society she based her sentence due
to biased beliefs and an unbalanced practice of law. Being an active member
in the society does not give her the right to commit whatever crime she
desires, and it surely does not give the judge the right to base the case
according to her liking. Equality must be implemented among all and paying
for mistakes should be valued by the same amount for all people regardless
of whether it was a yearly sentence, a large check or community service
hours.
Although Ms. Stewart's punishment was not appropriate because she had
her special treatment, the media coverage affected her company stock value
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negatively leading to huge losses. This affected her badly and that was the
most powerful punishment.
Research has shown that reputation of the CEO and top management is
linked to the reputation of the firm which is a key factor that promotes
investors' confidence and customers' trust in the firm. If reputation is
damaged by ethical misconduct; solving the problem will be difficult and will
take a long time to stabilize. As a result, Martha Stewart should be kept away
from playing any critical role in her company. After the case is settled and all
losses caused by Martha are recovered and the reputation of the company
re-elevates from its tarnished image, Martha should be put under probation
from managing the company. Unfortunately for the company and the
shareholders; since Martha is the face of the company and is the main
source of profit for the company (before the scandal), it is crucial that Martha
remains a part of the company.
That does not mean she should continue in her old position, this only
means that Martha will not be laid-off the company. She will be the face of
the company without actual managing of business affairs. In addition to
being a simple picture on the cover of her book or magazine, she is required
to finish a certain amount of hours in community service and helping the
ones in need or doing some form of extracurricular activities that would add
to the value of the company which was lost with its bad image.
Unfortunately for her, gaining the audience and the fans after losing them
is much tougher than gaining them the first time, so repairing the image will
take a long time. When the state of the company increases to the level it
sustained before the scandal or even if it increases more than that of the
previous state; Martha should be given a level of "monitored" authority to
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manage a sector of the company and to have a moderate say in its
operations.
After her release from prison in March 2005, Stewart launched a highly
publicized comeback, and was once again involved in Martha Stewart Living.
In addition to that, offerings of her company's Martha Stewart Everyday line
at Kmart were expanded to include a new line of ready-made home
furnishings, and its mass market interior paint line became available at
larger Sears stores. However, the most heavily publicized and promoted
aspect of her comeback was day time television, The Martha Stewart
Show which she returned to hosting. She also appeared in an adapted
version of The Apprentice also known as (The Apprentice: Martha Stewart).
Both shows were premiered in September 2005, and The Martha Stewart
Show is currently in its fifth season, in contrast to her other show, The
Apprentice which only lasted for one season due to the received poor ratings
during its conclusion; that did not encourage Martha to continue with
another season.
In the reading field, Stewart released a new book called The Martha
Rules on starting and managing a new business, and a month later her
company released Martha Stewart Baking Handbook, both of these books
were released in 2005. After a year from releasing The Martha Rules, she
released her own Home keeping Handbook, a reference book about looking
after your house. She also is a regular contributor of cooking, gardening, and
crafts segments on NBC's Today show. In the awards field; Stewart's daily
talk show was nominated in six categories for the 33rd Annual Daytime
Emmy Awards in 2006, including Best Host and Best Show.
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With her increasing number of fans in various fields of the business sector,
MSLO was encouraged to launch a line of houses that carry her name to be
built by KB Home initially in Cary, North Carolina and various other locations
nationwide. Those homes started to finalize its buildings early 2006, the plan
was set according to 650 homes and were planned to be sold for prices
ranged $200,000 to $400,000. A line of paper-based crafts for EK Success is
also in development. In September 2007, she launched an upscale line of
home wares for Macy's, which is the largest brand launch in Macy's history
putting in mind that Stewart has designed more than 2,000 items exclusively
for Macy's.
Her conviction made her face big challenges and since she overcame
these challenges her success rate has been increasing rapidly in during the
last period. Even though a few years back her Moral compass was set to
head for the opposite way –that’s when her only exit out of embarrassing
and pathetic situations was by lying and deceiving- but when her morals
were improved and her ethical standards leveled up a notch, that is when
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she managed to get out of the difficult times, healed her wounds, regained
her fans, paid her fines and recovered her position bravely and rapidly.
References:
http://en.wikipedia.org/wiki/Martha_Stewart
http://money.cnn.com/2004/03/05/news/companies/martha_verdict/
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