Department Coordinator

MARTHA STEWART

INSIDER TRADING CASE

Since she was a young woman, Martha Stewart learned a strong work ethic, from her parents, which became key for her success in her life. From her mother she learns how to cook and sew, later she learned the processing of canning and preserving from her grandparents, from her father she learned gardening. In 1967 she become a stockbroker and was very successful until 1973 when she quit, because of rumors of a scandal involving the furniture company where Martha worked. Several Principals at the firm allegedly received “kick-backs” for selling stocks in the financial-troubled company. Stewart and her husband move to Connecticut and bought an 1805 farmhouse, which later became the model for the set of Martha Stewart Living television program. In 1976 Stewart started a catering business in her basement with a friend, which became successful. Later, Martha Stewart bought her friends portion of the business. Shortly afterwards she was hired as manager of Gourmet Food Store, The Market Basket which she transform into a success. In 1977 her husband became the president of a publisher company and contracted Martha Stewart Company’s to cater for a book release party. The publisher was impressed with her and assisted her in developing a cookbook. The book Entertaining, became the best seller book at the time. During 1984 she publishes few more books, authored newspaper columns and magazines articles. In 1990 her magazine of which she was editor and chief. She started a weekly TV program in 1993. In 1997 she purchase everything related to the Martha Stewart brand’s, and consolidated into a new company “Martha Stewart Living Omnimedia”, where she serve as chairman, president, and CEO. In 1999 Martha Stewart Living Omnimedia (MSO) went public on the NY Stock Exchange. Ms. Stewart’s controlled 96% of voting power for the company.

LEGAL CASE

Martha Stewart case began in 2002 when she was accused by the U.S. Securities and Exchange Commission (U.S. Securities and Exchange commission –v.- Martha Stewart and Peter Bacanovic, 03 civ. 4070 (RJH) SDNY) under Section 20(b) of the Securities Act, 15 U.S.C. & 77t(b) and Section 21(d) of the Exchange Act, 15 U.S.C. & 78 u(d), of lying to the Northeast Regional Office of the United States Securities and Exchange Commission ("SEC"), an agency of the United States, the Federal Bureau of Investigation (the "FBI"), and the United States Attorney's Office for the Southern District of New York about why she sold nearly 4,000 shares of ImClone Systems stock in December 27, 2001, just before a Food and Drug Administration (FDA) decision about an ImClone cancer drug sent the stock plummeting. The United States of America –v.- Martha Stewart and Peter Bacanovic S1 03 Cr. 717 (MGC), state that Martha Stewart and Peter Bacanovic, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate and agree together and with each other to commit offenses against the United States, to wit to obstruct justice, in violation of Section 1505 of Title 18, Sections 1505 and 2, United States Code; to make false statements, in violation of Section 1001 of Title 18, United States Code; and to commit perjury, in violation of Section 1621 of Title 18, United States Code, Stewart made false and misleading statements violating Title 18, United States Code, Section 371 . She was illegally tipped by her employee and friend Peter Bacanovic in violation of Title 15, United States Code, Sections 78j(b) and 78ff; and Title 18, United States Code, Section 2. Stewart and Bacanovic where indicted on securities fraud and obstruction of justice charges also charged with conspiracy and making false statements, violating directly or

indirectly Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5, 17, thereunder. Securities and Exchange Commission (SEC) file a civil suit, seeking to bar Stewart from being in charge of any public company under Section 12 of the Exchange Act, 15 U.S.C. & 781, or that is required to file reports pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. & 780(d). Her lawyer Robert Morvillo base his defense with Stewarts statement that she “acted in good faith” when selling the shares. She pleaded not guilty to all charges. The criminal indictment says Stewart unloaded her shares of ImClone based on illegal inside knowledge that the family of ImClone founder Samuel Waksal was planning to sell its shares ahead of the government news; Waksal pleaded guilty and receive 7 years. He was indicted on five federal counts, including obstruction of justice, conspiracy and lying to investigators. Federal Prosecutor,