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I continue to feel outraged about this trial. This is a case in which prosecutors have invented a brand-new crime, with which no one has ever before been charged: the crime of knowing that a company insider was selling stock and therefore selling it yourself, which they declare makes you an insider too.
...before suing Stewart the SEC had never gone after the customer of a broker who offered his knowledge of what another customer had done as a reason to make a trade.
Of course, since no one’s ever been charged with this before, their victim, a.k.a. the defendent, had no way of knowing it could be considered a crime.
As Martha Stewart’s trial moves into a third week, an important question remains unasked: Why are the feds prosecuting someone [i.e. a member of the public – ed.] for receiving inside information, anyway? Isn’t the criminal the corporate official who acts on knowledge that the public doesn’t have?
...The law, however, is murky, and it’s doubtful that an investor who picks up information about a CEO’s stock sale (even a CEO the investor knows) has violated the law.
“Doubtful!” It’s “doubtful” that the thing could even be considered a crime. How are we supposed to defend ourselves from a justice system that decides that things that have been done for years, are now illegal? How would you like to have your business destroyed by a whim of the goverment’s like this one?
This is a travesty.
#2Hi Rick,
re: Martha Stewart, your recollection is at odds with the opinions I quoted in my post.
re: ExpressionEngine, I like it a lot. You might like to check out Forum4Bloggers.com. I founded F4B because I wanted a place to ask my own questions about blogging. F4B now has over 450 members, and it's a great resource for all kinds of information on blogging.
At any rate, my prior comment was somewhat irrelevant as to the specifics of Stewart's case: She wasn't convicted for insider trading. (And based on Chiarella v. United States 445 U.S. 222, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980), I was probably wrong about whether they could nail her on 10(b)(5) anyway; although in Chiarella they tried such a move, they failed. Destroyed Mr. Chiarella's life, but failed to get a conviction.)
She was convicted, though, for four counts of obstruction of justice and lying to investigators. And I'm certain that there have been others convicted on those charges before. Martha isn't unique in that regard.
As an article in the Ohio Northern University Law Review noted,
As anyone who has been following the news noticed, if a prosecutor cannot make his or her case on the substantive offense that they are investigating then they will consider making the case that the suspect has lied to an investigating officer at sometime during the investigative office and that lie in and of itself constitutes a crime. — Llewellyn Joseph Gibbons, "It's Nobody's Business, But You Still Cannot Lie About It: Criminalizing Innocent Attempts to Maintain Cyber-privacy" (2004) 30 Ohio N.U.L. Rev. 377, 380-381.
I do still agree with you that it was unconscionable what they did to her — for the same reason I think it's unconscionable that they should go after anyone for such things just because they can't prove that the crime they really wanted to nail someone for was committed.
Thanks for the input on EE. I'm 99.9999% convinced I'm going to buy it. Still a few questions to iron out.
#4She wasn’t convicted for insider trading.
That is correct. I commented on this here.
re: EE, I'm sure you've checked out their forums. They have excellent tech support.
Hi. I actually stopped by because you're using ExpressionEngine and I am checking out a few sites that use it while I try to decide whether my new site, RHDefense.com, will use it. (I already have another site, but I'm not trying to spam you, so I won't mention it.)
Anyway, the thing about Stewart is that while I agree with you regarding the egregious act of going after her, I'm not sure you're right about the law on that. I'm not a lawyer — and I am definitely not trying to give any legal advice here to Martha or anyone else! — but I am a student and I vaguely recall something about SEC Rule that I think goes by "10(b)(5)" (that could be wrong), which I think makes even non-employee "tippees" liable for "insider trading" when they trade on tips obtained from tippers who had a fiduciary duty not to share the information with them.
Again, I am not giving — and cannot give — legal advice. Anyone wanting such info should talk to a real lawyer. I'm just commenting on your story and mentioning a vague memory from my Business Organizations class last year.
That said, I still think it's reprehensible that they went after Martha like they did, while the President and his cronies can do much, much worse in furthering their own business interests.