Martha Stewart and Inside Trading Act
According to Section 10(b) of the Securities Exchange Act of 1934, insider trading is "any manipulative or deceptive device in connection with the purchase or sale of any security." This ruling served as a deterrent for the early part of this century before the stock market became such a vital part of our lives. But as the 1960's arrived and illegal insider activity began to pick up, courts were confused by this vague definition. So judicial members were forced to interpret this idea since Congress never gave a concrete definition. As a result, two theories of insider trading liability have evolved over the past three decades through judicial and administrative interpretation: the classical theory and the misappropriation theory. The classical theory is the type of illegal activity one usually thinks of when the words "insider trading" are mentioned. The theory emerged from the 1961 SEC administrative case of Cady Roberts. This was the SEC's first attempt to regulate securities trading by corporate insiders. The ruling paved the way for the traditional way we define insider trading - "trading of a firm's stock or derivatives assets by its officers, directors and other key employees on the basi
s of information not available to the public." The Supreme Court officially recognized the classical theory in the 1980 case U.S. v. Chiarella. U.S. v. Chiarella was the first criminal case of insider trading. Vincent Chiarella was a printer who put together the coded packets used by companies preparing to launch a large money offer for other firms. Chiarella broke the code and bought shares of the target companies based on his knowledge of the takeover bid. He was eventually caught, and his case clarified the terms of what has come to be known as the classical theory of insider trading. However, the Supreme Court reversed his conviction on the grounds that the existing insider trading law only applied to people who owed a fiduciary responsibility to those involved in the transaction. This sent the SEC scrambling to find a way to hold these "outsiders" equally accountable. The fact that Martha Stewart is staring into a legal deep hole is causing tremendous amusement among those who dislike the way she has imposed her vision of domestic perfection on the nation and made herself a billionaire in the process. Her fans disagree and are saying that Stewart is incapable of such things she is accused for. Stewart's own company has been damaged by the scandal, which has underscored the fact that it has only one product, Martha Stewart and if she is damaged goods, so is the company. Stewart has lost over $200 million dollars in the last year, nearly a quarter of her wealth. <
Some common words found in the essay are:
Supreme Court, Exchange Act, Martha Stewart, Grand Met, Vincent Chiarella, Roberts SEC's, Dirks SEC, Waksal Waksal's, Federal Agents, Waksal Sam's, insider trading, classical theory, misappropriation theory, martha stewart, supreme court, sam waksal, company held, takeover bid, dollars worth, peter bacanovic,
Approximate Word count = 996
Approximate Pages = 4 (250 words per page double spaced)
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