Martha Stewart Essay Example

picture of what has happened.6. What level of sales and profits would MSO have reached if Martha’s reputation had not been harmed? Refer to SEC or MSO websites for information on financial trends.

I would estimate that the profits would be $592 million if Martha has not incurred in her loss of 31% in advertisement due to her indict of insider trading.7. What range would the stock price have been in at the end of 2002 based on your estimates? Based on the calculation that the stock price would be increasing estimate of $3 every 2 months, by the end of 2002, the stock price would be estimate to $30 per share.8.

Martha’s overall net worth was huge relative to her investment in ImClone. Assuming she did not have inside information, was there any way she could have avoided the appearance of having it? She could have just ridden out the storm with the stock in her portfolio and taken any loss that may have occurred. It was not certain the reason why the FDA was going to reject the application, it may have been something that could have be rectified and then resubmitted, which would have caused no loss in stock price to Imclone.9.

How could Martha have handled this crisis better? Martha should have arranged for a press conference to the media that she has indicted into the insider trading and admit her misconduct. This would reduce her losses to the lowest rather than not telling the truth about the agreement. This would also have assured that the investors would not lost faith in her if she has admit her mistake and investor

would take her honesty as guarantee.10. Why is insider trading considered harmful? Should insider trading be banned if it assists in moving a stock price to a new equilibrium quickly, so that non-insiders are trading at appropriate prices sooner? It is harmful as since the information is not available to other investors, a person using such information is trying to gain an unfair advantage over the rest of the market.

Thus, it has deterred the meaning of transparency and fairness in the stock market. This would therefore hinder the economics growth and also affect the market confidence level of potential investor.I would think that it should be ban. This is because if all information is begin control by the insider trader to moving a stock price to a new equilibrium quickly so that non-insiders are trading at appropriate prices soon, investors would lose confidence in their disadvantaged position and would no longer invest. This would thus, hinder the stock market growth and affect the economic level of a country or rather, a global economic crisis.

However, if insider these insiders trade stock of their own company and report these trades to the U.S. Securities and Exchange Commission, it should not be ban. This would mean that the trading information is not kept in secret and all investors are able to find out a corporate insider’s opinion of the company.

11. If you wished to sell an investment in a company where one of your friends is an insider, or even a significant employee, should you call your friend to advise him you are about to sell? Why, or why not? I would not call my friend

to advise them if I know of the situation of my company. This would be unethical to do it as I would have made an unjust fairness to other investors as well. This would therefore affect the market confidence level of other potential investor. Also, it may be a legal issue if I would have known an insider and may be convicted for such act.