Martha Stewart Living
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Martha Stewart built a small catering business into a media empire. Her company Martha Stewart Living Omnimedia where she also stands as CEO of her company has generated more than $296 million a year. Making her one of America's most successful female entrepreneurs by telling people how to entertain. But on June 2003, she was charged on five federal counts including obstruction of justice, conspiracy and lying to investigators tied to her December 2001 sale of nearly 4,000 shares of ImClone Systems, a biotech company runs by a friend of her. She pleaded innocent to all charges, but she could go to prison for several years if convicted. Her former stockbroker, Peter Bacanovic, was also indicted and pleaded innocent (CNN Money 1).
What Martha did was some kind of insider trading. Insider trading law basically say: prohibit people from profiting from advance knowledge of a stock-moving event -- be it a merger, an earnings warning or a soon-to-be-published news story. Directors and other insiders cannot trade in the securities of their company or bank while in possession of material nonpublic information about the company or bank, and may not "tip" material nonpublic information to anyone. Once the information is properly disseminated and digested by the investing public, directors and others in possession of the information may trade...