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Analyst: Charges will Hit Martha Stewart Living
Aired June 4, 2003 - 19:09 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDERSON COOPER, ANCHOR: We want to go back now to Martha Stewart. Interesting note that her stock in her company, Martha Stewart OmniMedia, actually rose today.
"Fortune" magazine editor-at-larger Andy Serwer joins us from Salem, North Carolina to talk about what today's events mean for Stewart's company, ImClone as well as Wall Street in general.
Andy, thanks for being with us. Interesting reaction, both in the stock in her company and the street in general. Tell us about it.
ANDY SERWER, "FORTUNE" MAGAZINE EDITOR: It's really interesting to me, Anderson, why Martha Stewart's stock went up today. I mean, after she was hit with a criminal indictment. I think there are two reasons.
No. 1, you know, it's the old line, Wall Street hates uncertainty. This takes some uncertainty out of the works, even though it's not a positive thing. But No. 2, I think investors were seeing a slight positive here in that she wasn't indicted for insider trading. In other words, the government did not see this as a slam dunk.
However, I see this as being extremely serious for the future of Martha Stewart and especially Martha Stewart's company.
COOPER: Why do you say that? Do you think she cannot remain CEO? Yesterday she said she was going to.
SERWER: Well, you know, that remains to be seen. Martha Stewart wants to do a lot of things, right, Anderson? And she doesn't necessarily get to do them.
I think that's hanging over the company's head, the fact that she may be banned from being a public officer, an officer of a public company, excuse me. Also, I mean, jail time? You know, this is really big stuff here.
If she is removed as CEO, I think this is a huge blow. She could become a consultant to the company. She's still the largest shareholder. Obviously, she's still going to be telling the CEO a lot what to do. But can you imagine the ad campaign where she's suggesting that you buy these lily white sheets, here's a woman who did some jail time. I mean, to me that sort of doesn't work too well. What do you think, right?
COOPER: I don't know, Andy. Let me ask you, do you remember when there were some other CEOs in the past, and we're talking like a year ago, who were lead out in handcuffs in that perp walk, and the street, Wall Street reacted favorably to that. They felt like, you know, things were being cracked down on. You're not really seeing that same reaction today.
SERWER: Well, yes, I think the market did rally today. I'm not really sure that it rallied because Martha Stewart was indicted. I think there were other reasons.
I do think that, you know, Wall Street generally does cheer this type of thing. You know, there are some people who are complaining that Martha Stewart is picked on. "What about the real bad guys?" they say. You know, "What about the people at Enron and Tyco and Global Crossing and WorldCom and all that?" And I think they have a very good point.
You know, Martha Stewart is the only one of these people who is a woman and she's the only one of these people who's a celebrity. So is it just a coincidence that she was nailed?
It actually isn't. Because what she is accused of doing or at least what they tried to get her on, insider trading, is something that's easier for the feds to attack, if you will.
Ironically, they're unable to charge her with that, but the stuff that you and Jeffrey Toobin were talking about, the obstruction, the altering phone messages, the lying to investigators. I mean, that is very serious stuff. And if they can say and prove that she was doing X and Y really occurred, well, then she's in very deep trouble.
COOPER: There's also the civil SEC charge, which is going to be the insider training charge.
Andy Serwer, thanks for joining us tonight.
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