“Even if they’d never met her in person, people would talk about being like Martha, dressing like Martha, or having tastes like Martha” Martha Stewart, Omni Media CEO, represents the company’s image more than anything else; being tied directly to the company can damage reputation when the CEO is in the middle of a public scandal. After all, Stewart was an Icon to many women and her reputation is what helped her brand be so successful. From magazines to TV shows Martha Stewart Living Omnimedia was becoming a very successful company. Martha Stewart Living Omnimedia will also be referred to as MSLO.
Background of Scandal (needs more info I think)
In 2001, Martha Stewart was accused of illegal insider trading with the stock of ImClone Systems which slowly ruined her reputation. Stewart insisted that she had agreed with her stock broker to sell if the stocks went below $60 a share. Throughout the investigation she stuck with her story and had serious doubts that she was going to be incarcerated. Keep in mind that at the time Stewart held a Series 7 license; as a former stockbroker it seems she knew what she did was illegal. In 2003, the SEC filed security fraud charges against Stewart and her stock broker. To separate MSLO from Stewart, she stepped down as the acting CEO. In July 2004 she was eventually sentenced to five months in prison and five months of house arrest.
Time line of events (Collapsible)
•Dec. 26, 2001: ImClone Systems (IMCL) founder Sam Waksal is tipped that the Food and Drug Administration will decline to review the company's application for its cancer drug Erbitux, then tips his daughter to sell her ImClone stock and tries to sell his own.
•Dec. 27, 2001: Martha Stewart sells all 3,928 shares of ImClone stock she owns. Prosecutors later contend she was tipped that Waksal was trying to sell his shares.
•Dec. 28, 2001: The FDA makes its decision public. On Dec. 31, the first trading day after the news, ImClone drops 18%.
•Jan. 7, 2002: Stewart's broker, Peter Bacanovic, tells Securities and Exchange Commission attorneys that he and Stewart had agreed on Dec. 20, 2001, to sell ImClone if it fell to $60.
•June 12, 2002: Waksal is arrested and charged with insider trading. Stewart issues a statement repeating her assertion that her sale came about because of the $60 agreement.
•Oct. 2, 2002: Former Merrill Lynch (MER) assistant Douglas Faneuil pleads guilty to taking a payoff to keep quiet about the Stewart stock trade.
•Oct. 15, 2002: Waksal pleads guilty to six counts, including bank fraud, securities fraud, conspiracy to obstruct justice and perjury.
•June 4, 2003: Stewart and Bacanovic are indicted on nine federal counts. Stewart resigns as chairwoman and CEO of her company but remains chief creative officer and a board member.
•June 10, 2003: Waksal is sentenced to more than seven years in prison.
•March 5: Stewart convicted on all charges; Bacanovic convicted on all but one charge, falsifying a document.
•March 15: Stewart...