I’ve never met Martha Stewart, but I studied this case, and do I have an opinion? You bet I do.
The poor woman is suffering the shame and indignity of dispiriting confinement in a federal prison. And believe me, that is not a funny human experience, regardless of Leno/Letterman jokes. Will she rise above it, will she somehow turn the experience into a plus? We will find out by and by.
But the results of negative case verdicts and punishments tend to congeal with time like slow setting concrete. The chances to turn things around disappear, because even your own people want to move on. Leaving you sitting there surrounded by wreckage, like you’ve been hit by a tsunami.
I believe that her attorneys committed a huge blunder. They decided to not put her on the stand, no doubt, experience tells me, with the advice that she must not interfere with their decision. “Trust us, do as we say.” is the way it’s usually put to the client.
I want to look at that decision, and I’m quite sure that she wanted to be on that stand.
I’m quite sure that, given the chance, she would have got up there and delivered a stunning lecture on the workings of the stock market.
Martha Stewart had been a professional stockbroker, knew the workings of the stock market, how to play it, and now enjoys herself while doing it. And like most professionals, one can suppose she is familiar with the workings of the technical approach to stock market activity, and how it is graphically illustrated with the use of charts.
Playing the market with the use of charts is my hobby (at least it was when I had money.)
I checked out the chart of IMCL (Imclone Systems, the cancer drug company) at the time in question in December 2001, and she was perfectly reasonable, as a chartist, to draw a horizontal line at 60 and say to herself that if it dropped below 60, she would sell it.
Did she place and record a stop with the specialist at that price? No, but then most savvy speculators don’t do that, the specialist has a habit of setting them off to his own account advantage, before letting the price climb back up. So instead, one places a “mental stop”. It would either take off up from 60, or plunge down through 60, is the theory.
She goes on vacation, having left the instruction with her broker to sell if the price touches 60. If it was going down through 60, she planned to be out of it.
And it happened that on December 21, 2001, her broker told her by phone during a plane stopover that another client was selling because of information that the FDA was rejecting the cancer drug. And she sold out then and there BECAUSE THE STOCK WOULD BREAK DOWN THROUGH 60. Her intent was fulfilled, and she made a profit.
Her problem at trial was that she needed to educate the judge, and the jury, and the press, and the public about the esoteric nature of charting the market.
Fundamentalists (investors?), usually amateurs, who play the market their way don’t even want to study or understand the charting approach to making a profit. One might guess that none of the jury knew it, the judge didn’t know it, and her own attorneys weren’t familiar with it. Besides, there are many otherwise sophisticated market players who scorn the approach, and will have none of it, usually because they just don’t understand it. Expert witnesses could have been brought in to help, such as Don Worden, who heads a well-known web-based charting service.
And while we’re at it, nobody appears to be asking who leaked the information of the cancer drug rejection in the first place. An employee of the FDA? And shouldn’t THEY be held accountable? Because such decisions should be kept a deep dark secret until an announcement is about to be made, when a halt is called in the trading of the stock in question. Then nobody can buy or sell, and that’s the way it’s supposed to happen.
Sorry, but I think this is another example of the expensive attorney crowd once again getting caught out by their own sense of God-like invincibility. And the media and the public and certain important people looking for blood. Transparency is everything in courtrooms, and it didn’t happen here. American justice, a blood sport indeed.
I posted this comment on the web, and someone wrote to say that whatthehell, justice is just “screwed up”. Well, I don’t believe that justice is ever “screwed up”.
Just as I don’t believe that judges are ever “jerks”, or attorneys are ever “morons”, commonly applied terms, because those words suggest permanent shortcomings in their mental equipment.
Laws are instruments written, tested and perfected over time, and judges are appointed and lawyers are licensed to high standards so as to admit good competency for their proper application.
I believe that when justice isn’t working it is because it has become corrupted, a better word might be perverted, usually by conflicts of interest among the participants, conflicts hidden or obscured, driven by the money-engine.
And our system of justice provides no practical method of correction (forget the appeals oversight process where they shoot the wounded, or the Supreme Court review where their favorite resolution is “Review Denied” in over 97% of cases). The concrete, having been cast, sets.
It seems to me that what is lacking today is the quality known as “character” in the people who matter. “Ethics”, is the legal word for it, the word that says it all, and it’s actually taught to these people!
There’s a joke about the new Ethics Question on current ABA law exams. It goes like this:
A lawyer in a two-man practice does some legal work for an elderly client on her estate planning. It only takes a couple of hours and the lawyer bills her $850.00 for his time. A couple of weeks later he gets a check from her for $8,500.00. Today’s ethics question is: Should the lawyer tell his partner?
And we’re supposed to upgrade the other half of the world to our version of democracy. But that’s a whole other subject.