Man Without Qualities

Wednesday, October 09, 2002

O, Martha IV

In a prior post back in August, the Man Without Qualities noted a suit filed against Martha Stewart by a shareholder in her own company - Martha Stewart Living Omnimedia - alleging that she dumped shares of her own company right after selling her ImClone shares. The theory of that suit was that Ms. Stewart knew that her ImClone stock sale - even if it was legal and not based on insider information - was so inherently suspicious that it was bound to attract attention and throttle the stock price of Martha Stewart Living Omnimedia. The public, of course, did not know the facts about her ImClone stock sale. I noted:

It's hard to argue with the allegations in these complaints. If any evidence can be found that Ms. Stewart understood that her ImClone trades would tank her MSLO stock before she sold it, these new allegations could make Ms. Stewart's direct ImClone trouble look positively pastel.

Well, now there is this report:

Federal prosecutors have widened their investigation of Martha Stewart to include whether her public statements about why she sold ImClone Systems Inc. shares, if proved false, were intended to boost the price of her own company's stock and constituted securities fraud, people familiar with the matter told The Wall Street Journal.


Pastel seems to be it this season.

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