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Court Case Brief-US V. Martha Stewart And Peter Bacanovic

991 Words4 Pages

Tony Bombassi
Case Brief- U.S. v. Martha Stewart and Peter Bacanovic, 305 F. Supp. 2d 368 (SDNY 2004)
December 5, 2016

Facts
Martha Stewart was CEO of her own publicly traded company. Bacanovic was a stock broker at Merrill Lynch who handle the stock sale. The criminal charges against Stewart and Bacanovic came about on December 27, 2001 after the sale of 3,928 shares of stock in ImClone Systems, Inc. ImClone was a biotechnology company. ImClone had a new cancer treatment drug named Erbitux and had classified it as their lead product. On December 28, 2001, ImClone announced that the Food and Drug Administration had rejected the company’s application for approval of Erbitux. The indictment alleges that on the morning of December 27, 2001, defendant Bacanovic learned that …show more content…

Rule(s)
The government asserted that defendant lied about the reasons for selling stock she owned in ImClone is order to cover up an illegal trade. Also, the government asserted that defendant made materially false statements regarding the sale of the stock with the intention to defraud and deceived investors in order to slow or stop the erosion of the value of her company’s securities.
In the civil securities fraud context, the Supreme Court has held that intent indicates that the plaintiff act willfully with a realization that she was acting wrongfully, Ernst & Ernst v. Hochfelder, 425 U.S> 185, 193, 47 L.Ed. 2d 668, 96 S. Ct. 1375 (1976). Or in the criminal securities indictment did the plaintiff have a mental state embracing intent to deceive, manipulate, or defraud, United States v. Dixon, 536 F.2d 1388, 1395 (2d Cir. 1976).
The issue is not which definition of intent to apply, but whether, taking into account the heightened standard of proof in criminal cases, is there sufficient evidence of Stewart’s intent to deceive investors.

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