M6 Gautam


Not even the world’s most famous homemaker could escape the lure of corporate corruption when profit is involved. Dec 2001, Martha Stewart was involved in an insider trading triangle with the ImClone Systems CEO and her broker from Merrill Lynch. ImClone, a biotech corporation, was unable to get approval by the FDA of a large product which ended up dropping the publicly traded company’s stock price 16%. Before the information of the disapproved drug was made public, the former CEO sold $5 million in shares. Martha Stewart was informed of the disapproved medication and shares being sold, from the ImClone CEO by her broker with Merrill Lynch 2 days before it was made public, and was able to act on the insider information before the public. The tip Martha Stewart got allowed her to sell all her shares which saved a lose of $51,200. Martha ended up serving 5 months in federal prison, fined 4 times the amount she avoided losing in stocks, followed by 2 years of supervision. Oddly enough the public view of her is better than ever, this exposure didn’t weaken her current audience, and expanded the demographics of her brand.