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Non-Tech : Martha Stewart -- Scourge or Scapegoat -- Ignore unavailable to you. Want to Upgrade?

To: jrhana who wrote (70)	2/20/2004 9:11:37 AM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 165

Jrhana, very good stuff. This part explains what I've been arguing succinctly: ===== Suffice it to say that, to prove that Stewart committed securities fraud, the prosecution has to prove that she made statements (or omissions) that were: 1. Intentionally false and misleading. 2. Material. One of the reasons this will be challenging, in my opinion, is that most of what Stewart said in her statements was true, even if one believes that Douglas Faneuil told her the Waksals were selling stock. The main thrust of the statements was to 1) deny that she had been tipped off by Waksal; and 2) deny that she had committed insider trading. The prosecution isn't alleging that Stewart was tipped about Erbitux, and, in June 2002, Stewart had every reason to believe that, as she said, her trade was "entirely lawful": Technically, the kind of information Stewart allegedly received was "market" information, not "inside" information, and this kind of market information has not been prosecuted as illegal in the past. Under federal law, securities fraud can't happen accidentally: To be criminal, Stewart's false statements or omissions have to have been intentional and designed to mislead investors. If Stewart's lawyers told her that her trade was "entirely lawful," therefore, it is hard to imagine how the prosecution can prove that she intended this assertion to mislead investors. The key element of the charge, of course, is the $60 agreement. In my opinion, Seymour, Schachter & Co. have not yet proved that this agreement didn't exist. Even if they have, moreover, they will now have to convince the jury that, separate and apart from the true parts of Stewart's statements, this assertion alone was "false and misleading" and "material." slate.msn.com