Martha Stewart Imclone Scandal

956 Words2 Pages

What is the ethical issue implicated or raised by the event? On December 27, 2001, Martha Stewart “sold stock in a biopharmaceutical company, ImClone System, Inc., after receiving an unlawful tip from Bacanovic, at the time a broker with Merrill Lynch, Pierce, Fenner & Smith Incorporated” (SEC, 2003). Prior to Stewart selling her stock in the company, the CEO of ImClone, Samuel Waskal and his daughter Aliza Waksal “had placed orders to sell all of the ImClone stock they held at Merrill Lynch” (SEC, 2003) because they knew the Food and Drug Administration (FDA) was not going to approve the cancer drug Erbitux. Once the Waskal’s decided to sell all of their stock, they kept that information private. However, they did discuss their decision with …show more content…

FBI agents and state prosecutors investigated them as well. For this reason (illegal insider trading), Douglas Faneuil and Peter Bacanovic’s acts were seen as unethical because they failed to adhere to Merrill Lynch’s work policy, “governing the confidentiality of client transactions” (SEC, 2003). In fact, what was seen as unethical behavior for Douglas Faneuil and Peter Bacanovic was seen as illegal for Martha …show more content…

When people engage in unethical behavior(s) they should be held accountable for their actions. Whether it is a warning, dismissal from a job, paying a fine(s), probation or even receiving jail time, those should always be the consequences. Though, in the case of Martha Stewart and Peter Bacanovic, I do not agree with their sentencing. Honestly, I think the judge was too lenient. In my opinion, five months in jail and five months on house arrest is a cake walk compared to others that have committed similar types of crimes. For example, Rajat Gupta was convicted of insider trading, one count of conspiracy to commit securities fraud, and three counts of securities fraud. Gupta was sentenced to two years in prison and one year of supervised release. However, he did have to pay a larger fine than Martha Stewart, which was a $5 million criminal fine (SEC,

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