Martha Stewart II

[skywalker]

Question 2.

On 6/14/02 I posted a question about whether people buy on the advice of celebrities as much as the news media says we do. http://www.ironworksforum.com/ubb/cg...;f=10;t=009133

This was in connection to Martha Stewart selling stock possibly due to insider info.

This question is also related to that story.

Let's say you have invested a sizable percentage of your savings in a company that a friend of yours is a member of the board. This friend becomes aware of a bit of information that "may" cause the stock price to fall dramatically within a few days. You are given this information because s/he wants to protect you from a massive loss. By law you cannot act on this info and your friend should have said nothing to you about it.

So what do you do? Do you do nothing and abide by law. Do you sell, hoping no one is aware you are connected to the company through your friend, and risk being accused of insider trading.

I realize that doing this is illegal, but I have a hard time aggreeing that losing lots of money this way is very smart. Especially when your friend was just looking out for you.

I know a massive sell-off hurts others who don't sell (they don't know of the stock drop), but it would be very hard to take the loss.

What do you think? I think it's all about survival, baby!

I hope I'm never placed in this situation!

Mark

[Neb]

I would sell, no doubt about it. Then just hope that noone notices that you've been told, if there are no letters or emails proving that you've been told then you should be able to deny it if someone accuses you of having been told.

[skywalker]

I beleive that when you are someone unknown and the amount of money is fairly small (under say, $100,000), there is less chance of being snagged.

It's the people like Stewart who are in the public eye who usually get caught. Seems like people love to see the successful people get taken down. Mostly jealousy I guess.

Mark