01 April 2004
Wrongheaded Prosecution of Martha Stewart
The prosecution of Martha Stewart and Peter Bacanovic for having lied to Justice Department investigators of the circumstances surrounding her sale of ImClone stock illustrates how the self-righteousness of supposed guardians of the public interest can lead them to harass prominent figures in order to highlight an inequity in society that they believe it is their duty to correct. Mr. Bacanovic would more appropriately be disciplined by the NASD for having violated the confidentiality of his relationship with Mr. Waksal by sharing with his celebrity client, Ms. Stewart, information on insider trading by the chief executive of ImClone.
Ms. Stewart has been admirably, if not stupidly loyal to her stockbroker. A securities dealer is licensed by the state in the expectation that he will abide by rules of fair play that prohibit the sort of actions he took when he learned of Mr. Waksal’s sale of ImClone stock. Indeed, Mr. Bacanovic seems to have made the decision to expand the generosity of Mr. Waksal by divulging to someone he thought deserved knowledge of the insider information that Mr. Waksal restricted to his close relatives.
Are clients really expected to question the source of information each time they receive a recommendation from their financial advisors? Apparently, wealthy celebrity clients are. If such clients tempt their stockbrokers to give them more solicitous treatment than the rest of us, is it the responsibility of the government to punish them for their allure? Certainly, a licensed financial advisor ought to be held to a standard of professionalism that seems to have been broken in this case. Thank God Maitre D’s are not subject to the same penalty for seating a favorite customer at a select table. More to the point, it’s a relief that sitting there does not attract federal investigation. It might tempt a diva to lie about the wink she flashes on entering a restaurant.
The prosecution of Martha Stewart and Peter Bacanovic for having lied to Justice Department investigators of the circumstances surrounding her sale of ImClone stock illustrates how the self-righteousness of supposed guardians of the public interest can lead them to harass prominent figures in order to highlight an inequity in society that they believe it is their duty to correct. Mr. Bacanovic would more appropriately be disciplined by the NASD for having violated the confidentiality of his relationship with Mr. Waksal by sharing with his celebrity client, Ms. Stewart, information on insider trading by the chief executive of ImClone.
Ms. Stewart has been admirably, if not stupidly loyal to her stockbroker. A securities dealer is licensed by the state in the expectation that he will abide by rules of fair play that prohibit the sort of actions he took when he learned of Mr. Waksal’s sale of ImClone stock. Indeed, Mr. Bacanovic seems to have made the decision to expand the generosity of Mr. Waksal by divulging to someone he thought deserved knowledge of the insider information that Mr. Waksal restricted to his close relatives.
Are clients really expected to question the source of information each time they receive a recommendation from their financial advisors? Apparently, wealthy celebrity clients are. If such clients tempt their stockbrokers to give them more solicitous treatment than the rest of us, is it the responsibility of the government to punish them for their allure? Certainly, a licensed financial advisor ought to be held to a standard of professionalism that seems to have been broken in this case. Thank God Maitre D’s are not subject to the same penalty for seating a favorite customer at a select table. More to the point, it’s a relief that sitting there does not attract federal investigation. It might tempt a diva to lie about the wink she flashes on entering a restaurant.
Comments:
Post a Comment
