Business Ethics Martha Stewart case

CASE ANALYSIS: MARTHA STEWART LIVING OMNIMEDIA INC.: AN ACCUSATION OF INSIDER TRADING. Name: Grade Course: Tutor’s Name: (30, October, 2010) Case Analysis: Martha Stewart Case It is evident in this case that there are several ethical issues that Martha Stewart and her associates were involved, these includes; the issue of misleading financial analysis, the insider trading of the shares, the issue of executive compensation and defective products. The issue of insider trading of the shares is evidently exposed, initially Martha Stewart was traveling, at some point she browses through the emails, during this time she discovers that someone had tried calling her from the brokerage firm called the Merrill Lynch. This call was aimed at giving her some information regarding the sale of the shares, this can be evidenced due to the fact that within a very short time of two minutes after returning the call, she placed a sell order on her entire holding of ImClone shares and Douglas Faneuil who is the trading assistant at Merrill Lynch executed the order, selling 3,928 shares of Imclone system Inc (Drew, 2007). It is evident that there was a conspiracy between Martha Stewart and the management of the Merrill Lynch brokerage firm to manipulate the financial market for their own interests. Martha Stewart also teams up with Sharon Patrick forms a business plan that saw the birth of her business Omni-media which manages to double her net worth from $614.7 to $1.27 millions within the shortest time (Hays & McGeehan, 2002). In relation to this Mr. Faneuil changed his statements to the Federal investigators on June 19, 2002 contradicting the prior claim of a stop-loss order which led to his suspension together with his boss Mr. Bacanovic, this suspension affected their pay. In another incidence Harlan Waksal as the CEO of the ImClone sold his shares for $ 50 million in a rush and ensured that they did not inform the Board of Directors well in advance, this was after he realized that the colon Cancer drug that was produced by this company would fail the test. Bank fraud cases were also charged against Sam Waksal for having forged the signature of the of the ImClone general counsel in his rush to beat the deadline for closure of the stock market. The second ethical breach is that of the defective products which involved the Imclone systems Inc. which was founded by Dr. Samuel Waksal in 1984 as a biopharmaceutical company which was dedicated to developing breakthrough biological medicines in the field of oncology was also being faced with the problem of producing defective products. The drug was called Erbitux which was intended to treat the Colon Cancer; this drug was under review by the U.S Food and Drug Administration. The third Ethical issue is the executive compensation, whereby the president of scientia Mr. James Neal was fired by Samuel Waksal .The president had only 8 months with the firm. Dr. Sam Waksal fired Mr. James Neal because he felt hampered in his ability to engage in the illegal, unethical and fraudulent conduct. Dr. Sam Waksal claimed that the reason for termination of the president’s (James Neal) services was due to his compensation plan and its interference with the potential investment s in the company. According to ...