PHI 2397 Lecture Notes - Lecture 2: Imclone Systems, Betty Crocker, Insider Trading
4 Jul 2018
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Martha Stewart was very successful at knowing her audience and selling a lifestyle
She was the epitome of success in America and made herself a billionaire by befriending all of
her readers
In 2001, she sold 4000 shares in a drug company the night before the FDA rejected that drug
which then caused the drug stock to tank
- this started allegations of insider trading
- a year later, she was charged with fraud (but not insider trading)
■ that day, she resigned as CEO but stayed with her company in a different
position
■ she later took out a full-page ad in USA today and wrote an open letter to
her ‘friends and loyal supporters’
Effectively her always communicating and treating her customers as ‘friends’ and appreciating
them gained her success even after she went to jail
• Bought 4000 shares,
• Accused of insider trading, 5 months in minimum security prison .
• Using information that she shouldn’t of have had.
• Raises a general ethical question
o When she was found guilty her stock plummeted
o ‘A small private matter of her’
♣ Disclosure of the FDA
o 200 people in her company lost their jobs
• What is the ethical question in respect to her action
• She should of weighted the minimal amount of money with the consequences of being
caught and then the effect and her concern,
• She wasn't following the law, the interest of your company and if she was to get caught.
• Pinto Car incident
• She was Betty Crocker for the new age, home cooking, gardening.
• She should have been weighing about how much her company suffer
• Martha talks.com
o Talks about her experience
Junior’s:
● Martha Stewart’s expert power in lifestyle created her cultural authority
● Martha built a persona where she was close with her fans building a relationship where
they thought she was one of them
● She created a magazine of her own on the how-to lifestyle genre
● Building an empire for herself and her own billion dollar business
● Martha Stewart sold all of her shares for IMClone a pharmaceutical company before its
cancer curing drug was rejected by the gov’t
● The info was not made public and only known by her and thus she was guilty of insider
find more resources at oneclass.com
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Document Summary
Martha stewart was very successful at knowing her audience and selling a lifestyle. She was the epitome of success in america and made herself a billionaire by befriending all of her readers. That day, she resigned as ceo but stayed with her company in a different position. She later took out a full-page ad in usa today and wrote an open letter to her friends and loyal supporters". Effectively her always communicating and treating her customers as friends" and appreciating them gained her success even after she went to jail. Accused of insider trading, 5 months in minimum security prison . Using information that she shouldn"t of have had. When she was found guilty her stock plummeted. A small private matter of her" o o o caught and then the effect and her concern, o. 200 people in her company lost their jobs. What is the ethical question in respect to her action.
