Martha Stewart Financial Fraud Case

Fines against banks and other corporate firms for unethical practices are tallying up but their deterrent value seems to be negligible. Simply prosecuting the institution alone for not operating morally is not going to ‘fix’ the problem. According to logic, you have to get to the root of the problem and the root of financial fraud problems are not the institutions themselves but actually the person committing the heinous acts. The first question to ask is why do individuals (executives in this case) engage in unethical behaviour? Many inquiries show that the incentives for executives to engage in unethical transactions which are not in the interest of the company outweigh the cons in the end. If you only fine the company for a C-suite’s bad behaviour, the individual who commits the crime gets off ‘scot-free’. That serves as a bad example for others in the industry because it doesn’t discourage those actions and they reoccur as a result. Although, jail is the proper punishment for such acts, it is very difficult to pin down executives for their crimes; a middle ground needs to be established. If the executive(s) involved are at least forced to pay back the bonuses gained from the deals, the incentives of participating in illegal activity decrease. If you don't also punish the individual,

Also, SEC banned her from acquiring roles that allow her to prepare/audit/disclose financial results of a public company until 2011. Only very recently, she rejoined the board of directors and became chairwoman of her namesake company. If executives are severely punished, many fear that the institution will crash. However, this is not really true. Martha Stewart Living Omnimedia did not suffer from Stewart’s conviction, and was in fact better than ever when she