Martha Stewart's Downfall

Martha Stewart's downfall: insider trading and its consequences

• Martha Stewart's rise to success as a businesswoman, author, and TV personality

• Stewart's investment in ImClone Systems, a pharmaceutical company, and her ownership of 5,000 ImClone shares

• Rumblings about FDA approval for ImClone's anticancer drug, Erbitux, and anxiety among investors

• Sam Waksal, CEO of ImClone, attempts to sell shares, but is told he needs approval from ImClone's general counsel

• Waksal forges approval from the counsel and sells shares, eventually pleads guilty to bank fraud and conspiracy

• Stewart's broker at Merrill Lynch, Peter Bacanovic, and his assistant, Douglas Faneuil, inform her of Waksal's selling of shares

• Stewart sells 3,928 shares of ImClone at $58 per share, saving $39,507, just a day before ImClone announces FDA's lack of approval

• Investigation into Waksal's illegal sales leads to scrutiny of others, including Stewart, who is charged with lying to federal investigators

• Bacanovic and Faneuil offer false explanations, including a tax-loss selling plan and a $60 stop-loss agreement

• Bacanovic and Faneuil change their story on the tax-planning sale and admit to lying to the SEC

• Stewart and Bacanovic are convicted of conspiracy, obstruction of an investigation, and making false statements to federal investigators

• Stewart faces consequences, including resigning from her positions on the boards of the New York Stock Exchange, Omnimedia, and Revlon, and losing her syndicated column and radio show, as well as ad revenue for her TV show. She is sentenced to five months in federal prison and five months of house arrest, and her company suffers financially.Martha Stewart's Legal Troubles and Business Impact

• Martha Stewart was convicted of obstruction of justice and making false statements related to a stock sale.

• She was sentenced to five months in prison and five months of house arrest.

• Some speculated that Stewart wanted to be free by March 2005 to film her TV show's fall season.

• Stewart encountered difficulties with her time limits for being away from home during house arrest.

• She was quoted as saying she knew how to remove her ankle monitor by looking it up on the internet.

• When Stewart reported to prison, her company's stock price was $12.03, while the price of ImClone stock was $54.10 per share.

• ImClone stock would climb as high as $90 per share.

• Martha Stewart Omnimedia's stock has climbed to $42 per share but has hovered between $17 and $24 per share since 2006.

• Stewart's legal troubles had a significant impact on her business empire and personal brand.

• Her company suffered a decline in revenue, and some advertisers pulled their support.

• Stewart's reputation was also tarnished, and she faced criticism and public scrutiny.

• Despite the challenges, Stewart has continued to rebuild her brand and expand her business ventures.