1. Stewart’s trial strategy was to categorically deny any wrongdoing. She would not admit to the insider information, lying to investigators or obstruction their investigation. Rather, she insisted that she did nothing wrong. This strategy was her downfall during the trial. According to Jacobs in “Loyalty’s Reward”, “It appears not that Stewart was trying to be loyal to her friends and associates, but rather that they were trying to be loyal to her.
” In other words, Martha, Waskal and Bacanovic admitted nothing about her involvement in the scandal so that she would not have to face any significant charges or punishment. In addition, by not admitting to selling the stocks short based on insider information, she was able to go back to MSLO without any real proof that she was an untrustworthy businesswoman. After all, shareholders would be loathe to keep shares of MSLO and new investors would be wary of buying stocks if they knew that Martha was willing to help another company cheat the shareholders.
In the end, she served less than a year (in and out of prison) and her business rebounded after her release. 2. Stewart was not the only player in the ImClone scandal. Her broker, Peter Bacanovic, was convicted of the same charges as well as perjury and received the same sentence as Stewart. Samuel Waskal, founder of ImClone and Stewart’s friend, was convicted on many counts and sentenced to eighty-seven months in prison. Stewart’s sentence was entirely fair, if not a bit lenient.
“Maybe it might give the average guy a little more confident feeling that [he] can invest in the market and everything will be on the up and up. ” (Pruden) She served her time at a minimum-security prison and later spent five months on home confinement, violating the terms of her release more than once. Waskal’s conviction and sentence was reasonable given that ImClone was his company and he betrayed his investors by suggesting that his friends should sell their stock.
Bacanovic’s sentence, however, was far too lenient. A broker should be trustworthy, both by the companies for which he invests and the clients he represents. By assisting Waskal in the scandal, Bacanovic proved that he was untrustworthy and unfit for the business of high finance. The financial market is sensitive, victim to the whims of investors who may be confident one day and pessimistic the next. No one deserves an unfair advantage, especially when the shareholders invested their money in good faith.