Rory,
I somehow don't think the way the media is painting it is how it happened. I don't know if you guys remember some of the 1980's insider trading things, but I actually knew Steve Glauberman who ran a small scam in the late 1980s where he took takeover information from his law firm then tipped friends (in Connecticut?) who traded on the info. That was a scheme. Steve was a nice guy, a good M&A lawyer but he was flawed and it cost him everything.
As near as I can tell (just listening) what seems to have happened with Martha is she bought IMCL shares because she knew Waksal who was chairman, they were on the Hampton party circuit, maybe they dated, who knows. About 4000 shares. Now, no doubt she is a prime client in a High Net Worth group at Merrill, and when IMCL dropped in price her broker called her. I doubt she had a stop loss order in, I doubt she knew what one was; I'm pretty sure she left all that stuff up to her broker. She no doubt said on the phone, wait, let me call Sam and see what's going on.
Not because she was part of a scheme and not necessarily because she thought she'd get the inside dope, but because she could. Also (I've been in this situation) when the chief exec has invited you into an offering, you feel like you maybe shouldn't sell unless you let them know. It's the most natural thing in the world.
Now, Martha talks to Sam and he says, "hmmm, I wouldn't want to see any friend get hurt, go ahead and sell," or "Things look like crap, sell." And Martha says, "Are you sure, because I don't mind holding, I have a lot of faith in you, yada yada yada." But she hangs up, calls her broker and sells.
I actually think that's probably how it happened.
Her big mistake was 1) not hiring a lawyer as soon as the first whiff of this fecal matter hit the rotating machine and 2) maybe trying to create an "acceptable" version of what happened (the stop order, etc.).
In any event, the usual penalty for a tippee in this sort of circumstance would not be jail time or even a fine, but rather a disgorgement of the gains, if I remember correctly. For the Boeskys, Levines and Glaubermans of the world it's serious punishment, but not for someone like Martha.
The obstruction of justice stuff, though, probably has some legs and she should hire a lawyer and just shut up.
Which leads me to: will this affect MSO's revenues? Will housewives across the country stop watching or subscribing to Martha?
I don't think so. Which makes this look a little more like an overblown media-created disaster to me than anything lasting. The women's movement (which might be said to dominate the women's press) positively hates her, mostly because they see her as a bad role model. They much prefer Carly Fiorina, but for my money (literally) I think Martha's a genius, a true business genius.
Kb |
