Writes Alan Reynolds in Canada’s National Post:

…the SEC’s complaint effectively refutes both its own charges and those of the government. The SEC says, “Stewart asked Faneuil for the current market price of ImClone shares and was given a quote of approximately $58 a share. Stewart then instructed Faneuil to sell.” That is exactly why Stewart said she sold ImClone that day — the price was falling fast. Faneuil’s now claims he told her that the Waksal family was selling, but not why (Waksal did not say). But the SEC refutes Faneuil’s new story too by saying, “Stewart then immediately called Waksal [after selling her ImClone shares], and left the following message: “Martha Stewart [called] something is going on with ImClone and she wants to know what.” The fact that she had to ask that question proves Martha Stewart did not know what was going on with ImClone after talking to Faneuil and selling her shares. End of story. Case closed…

…It took the government a year to fabricate three new offences, all of which amount to the same charge of giving a supposedly misleading explanation for a perfectly legal stock sale. This newly refabricated case is not about illegal lying at all: Martha Stewart has not been charged with perjury. Perjury is one of the fabled “nine counts” that is not hers, but her broker’s. In a more important sense, however, this case has always been about lying. There was Congressional lying a year ago about Martha Stewart’s alleged tip from Sam [Waksal]. And what little remains of that discarded case is now based entirely on the testimony of a proven liar, Douglas Faneuil. He says he was lying before (when he supported Stewart’s recollection) but has converted to telling the truth now (when he supports the government’s story). Yet this is a fellow who admits his past testimony has been for sale, and any gift Mr. Faneuil may have gotten from his boss was token change compared to being offered only a misdemeanor wrist slap and let off without even a dollar fine. [National Post, “The Sleazy Political Persecution of Martha”, Alan Reynolds, June 6, 2003]

And from the WSJ:

Prosecutors didn’t see fit to bring a criminal charge of insider trading (perhaps because there’s no case) over her sale of ImClone shares. Instead, the U.S. Attorney relies on a securities fraud charge to give the appearance of added heft to the alleged wrongdoing. The claim is that because her own company is so dependent on “Martha” the brand name, her alleged lies about the motive for her ImClone sale amount to a material misleading of the shareholders of Martha Stewart Living Omnimedia…So all of her “crimes” arise from her fear of prosecution over something that wasn’t a crime (her ImClone sale). [“Mayhem Over Martha”, June 5, 2003, WSJ]

The op-ed also makes an excellent observation on “insider trading”:

…Insider trading traditionally presumed the culprit was violating a duty of confidentiality to a client or employer. The SEC has gradually overthrown this clear-headed definition in favor of one in which the market itself is “wronged” if somebody trades for the “wrong” reason, defined as somebody having information that she was supposed to know she wasn’t supposed to have. Presumably a scrap of paper could blow into your pocket and if it contained material nonpublic information, you could be charged with insider trading for acting on it. [“Mayhem Over Martha”, June 5, 2003, WSJ]

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