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Published: Monday, 6/9/2003

A very good thing

Of course it's about Martha. The federal prosecutor can insist with a straight face that “Martha Stewart is being prosecuted not because of who she is but because of what she did,” but he's not fooling anyone. The point of prosecuting such a well known celebrity is to grab the public's attention and hold it.

And the point is well taken if it sends a message that even the high and mighty aren't above the law when it comes to insider trading accusations.

Similar allegations against, say, a Martha Jones, said one analyst, wouldn't have the same impact.

Martha Stewart's mug graced the front page of countless newspapers a day after she was charged with securities fraud and lying to authorities.

Sure the government went after a big fish to make a big splash about alleged obstruction of justice, conspiracy, securities fraud, and making false statements, but, to quote veteran prosecutors, “So what?” It goes with the territory of being famous and fallible.

And timing is everything. In the wake of corporate scandals like the Enron debacle, shafted shareholders are in unforgiving moods about unscrupulous chief executives, and U.S. prosecutors are anxious to satisfy public vengeance with high profile criminal indictments.

Along comes Martha Stewart, television personality, lifestyles media mogul, former model, and stock broker, raising eyebrows with a stock sale made under pretty suspicious timing.

Perhaps under different circumstances, Ms. Stewart's stock transaction - dumping nearly 4,000 ImClone Systems shares the day before the company's stock price plummeted - might have passed into memory with a simple reprimand from the SEC. But with the government gunning to crack down on corrupt corporate officers, Martha Stewart didn't stand a chance of getting off with a slap on the wrist.

The Stewart saga from chairwoman and CEO of a multimillion-dollar lifestyle empire to defendant in a federal insider trading case is no sob story. The company Ms. Stewart has hired to handle her public relations challenge may try to win sympathy for the defense by portraying the 61-year-old domestic guru as a hard-working, talented woman unfairly targeted for her business success.

But the reality is she is less a victim of a Wall Street vendetta than a celebrity culture that leads some luminaries to believe they have a license to misbehave.

Certainly Martha Stewart is innocent -as she vehemently maintains - until proven guilty. But, clearly, federal prosecutors have damaging ammunition not only about how she may have been tipped in advance of the price tumble of Imclone stock, but what she may have done later to cover-up the details of her questionable stock trade.

“The average investor has to make investment decisions based on what is public,” said Barry Rashkover of the SEC in New York. “They don't have access to the kind of information she [Stewart] had.”

It's unlikely Martha Stewart will ever be incarcerated, despite all the jokes about how the queen of Kmart might decorate her cell.

But given the public's mood these days about misbehavior in high places, prosecution of the diva of home d cor was perhaps inevitable. And though she would disagree, that is a very good thing.



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