Friday, May 26, 2006

Martha Stewart Round Two

She lost the first bout to federal prosecutors, and round two is now beginning. Some folks may have forgotten that on the same day that she was indicted by a federal prosecutor Ms. Stewart was also named in an SEC civil case.

The SEC case is now moving forward, and this should be an interesting case. In the criminal case Ms. Stewart was not accused of insider trading, presumably because the insider trading case is weak against her, and the burden of proof high in a criminal case.

In the SEC case, the burden of proof is lower on the government, and the SEC did in fact sue for violation of the insider trading laws. I suppose there could always be a settlement, but I don't see her settling charges now, after all that she has gone through.

Plus, there is not much of a downside for her. If she wins the SEC case, she would give herself great press and clear her name a bit. She might even get back her positions as chairwoman and chief executive of Martha Stewart Living Omnimedia. If she loses, she pays a fine and continues to remain out of corporate management.

Given her public relations successes during the criminal trial, and after sentencing, and the legal issues surrounding this dubious charge, it wouldn't surprise me at all to see this one go all the way to trial.
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