time in a federal prison. Martha Stewart Martha Stewart is a successful businesswoman, and she has established a well-known business. Martha Stewart committed a crime of “…obstructing justice, conspiracy, and making false statements during an insider trade investigation…” (Crawford, 2004). Martha was found guilty of the charges brought against her, which she did receive a prison sentence of five months in a federal prison. Afterwards Martha was placed on house arrest for an additional two months
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price decline due to Martha Stewart’s loss of reputation? 3. Who is Martha Stewart’s target market? 4. What qualities were associated with the Martha Stewart brand, before the controversy? Which of these were affected by the accusations of insider trading, and how? How would you find out for sure? 5. 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. 6. What range would the stock
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Chapter 2 The Financial Market Environment ( Instructor’s Resources Overview Money and capital markets and their major components are introduced in this chapter. Firms need to raise capital in order to survive. Financial institutions give firms access to the money they need to grow. However, greed can drive financial managers and institutions to commit actions that get them into trouble and even force bankruptcy. These bankruptcies result in limited capital flows to firms, and both they and the
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efforts to constrain them, even though they still own a minority of the shares. What are the costs and benefits of prohibiting insider trading? Insider trading occurs when a person makes a trade based on privileged information. Managers have access to information that outside investors do not have. By using this information, managers can exploit profitable trading opportunities that are not available to outside investors. If they were allowed to trade on their information, their
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quantities. NAFTA also led to cheap labor coming from Mexico into the US and many US citizens lost jobs in the manufacturing industries. 3. SEC Insider trading This is an offence committed when a person with access to non-public information uses that information when trading in the shares of the company. For a person within a company to be convicted for insider
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varieties of laws applicable to the securities markets. These laws were the result of certain abuses that took place during the last decade. The collapse of the stock market of Bangladesh in 1996 provides an impetus for the regulation of securities trading. Securities markets regulating authority of Bangladesh along with the investors recognize that the regulation of securities markets is necessary in order to restore the confidence of the investors in the markets and ensure a continuous flow of capital
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International Journal of Humanities and Social Science Vol. 1 No. 15 [Special Issue – October 2011] A Corporate Hero with Scandal: Lessons Learned from Martha Stewart’s Insider Trading Crisis Shuhui Sophy Cheng Assistant Professor Department of Communication Arts Chaoyang University of Technology 168 Jifeng E. Rd. Wufeng District Taichung 41349, Taiwan Abstract Martha Stewart places her name on her products. She becomes the face of her company and the voice of her brand. When her personal
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or maintain credit, to arrange for the extension of credit, or to renew an extension of credit, in the form of a loan to or for any director or executive officer" of the company (Ramos, 2008). The act places greater controls on insider activities. The SEC defines an insider as an executive
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School of Business Georgia State University Email: rwhite42@gsu.edu Preliminary and incomplete Comments welcome This draft: February 18, 2014 Abstract: We use a new data set obtained via a Freedom of Information Act request to investigate the trading strategies of the employees of the Securities and Exchange Commission (SEC). We find that a hedge portfolio that goes long on SEC employees’ buys and short on SEC employees’ sells earns positive and economically significant abnormal returns of (i)
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society took a portion of her life by unethically tricking George into buying/selling stocks based on her insider information as a stock broker. She intentionally left notes for George to find that identified which stocks were performing well, and those that were dropping. George used the information to invest his savings to invest in the market, leaving a huge trail hinting at insider trading. Next, Elaine used an assumed name and reported him to the SEC, who investigated, and charged George with
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