Save Martha Stewart? Observations about Equal Justice in U.S. Insider Trading Regulation

By Heminway, Joan MacLeod | Texas Journal of Women and the Law, Spring 2003 | Go to article overview

Save Martha Stewart? Observations about Equal Justice in U.S. Insider Trading Regulation


Heminway, Joan MacLeod, Texas Journal of Women and the Law


I. Introduction

Martha Stewart1 is the subject of a civil enforcement action alleging violations of U.S. securities laws and regulations governing insider trading.2 This, in and of itself, is not remarkable. Many rich and powerful people-and many others in less financially and socially advantaged situations-have been pursued and brought to account for trading securities while in possession of material, nonpublic information. In these post-Enron times,3 much of the public has become numb to the pain of new revelations of possible securities fraud, including insider trading. In this landscape, the Martha Stewart insider trading investigation (including the related insider trading proceeding) is just one of many examples.

Yet, the Martha Stewart investigation somehow seems different-out of proportion to its apparent financial magnitude.4 The human and monetary resources that have been (and continue to be) deployed by the U.S. Congress in connection with possible lawmaking, the U.S. Securities and Exchange Commission (SEC), and the U.S. Department of Justice (DOJ)5 in pursuing Martha Stewart seem vast when compared to the gross profit she made from her December 27, 2001 sale of approximately 4,000 shares of ImClone Systems Incorporated ("ImClone") common stock.6 The facts, as we now know them,7 suggest that the considerable governmental resources spent pursuing Martha Stewart result from an express decision to single her out for potential criminal prosecution or civil enforcement based on some characteristic or characteristics personal to her or to one or more groups of which she is an actual or perceived member. For example, one may conclude that she has been singled out for investigation because she is (1) a woman, (2) a member and financial supporter of the Democratic party, (3) a public figure, or (4) a combination of some or all of the foregoing-that is, a very visible and controversial female public figure with political interests adverse to those of the Bush administration.8

The selective or targeted use of government resources in investigating and bringing civil enforcement proceedings or prosecuting criminal actions is an accepted part of civil and criminal enforcement.9 Those charged with enforcing our laws must have evidence of a possible violation of those laws before they may begin the inquiry and investigation process. This type of information may be more available with respect to some people or classes of people than for others. Moreover, federal investigators have only limited resources available for use in pursuing possible violators.10 Accordingly, each prosecutor or enforcement agent must pick and choose those against whom the laws within its jurisdiction will be enforced.11 This enforcement discretion,12 while broad, is subject to statutory, regulatory, and constitutional limits in certain cases.13 Even validly exercised enforcement discretion, however, may tilt the enforcement playing field in directions that do not well serve the intended purpose of and policies underlying the applicable legal or regulatory scheme. Enforcement bias14 that does not favorably serve the intended purpose of or policies underlying the laws or regulations being enforced should be identified and eradicated.

The recent Congressional, SEC, and DOJ emphasis on securities fraud investigations, prosecutions, and civil and administrative enforcement actions (many of which include facts supporting insider trading allegations) has put U.S. insider trading regulation in the spotlight.15 In this environment, important questions about selective enforcement16 of insider trading violations remain unanswered. Among these questions is the extent to which the nature of U.S. insider trading regulation allows for selective enforcement and the introduction of enforcement bias based on the nature and composition of the enforcement body or the personal background or characteristics of the individual enforcement agents.17 This question can be answered only by reference to the structure of the applicable system of regulation and by analysis of the impact of that structure on the effective enforcement of insider trading prohibitions. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Save Martha Stewart? Observations about Equal Justice in U.S. Insider Trading Regulation
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.