Samuel Waksal, chief executive officer of ImClone Systems, Inc., and Martha Stew

Question

Samuel Waksal, chief executive officer of ImClone Systems, Inc., and Martha Stewart, chief ex­ecutive officer of Martha Stewart Living Omnimedia (MSLO), were clients of stockbroker Peter Bacanovic. When Waksal began selling his ImClone stock. Bacanovic allegedly had Stewart informed, and she sold her ImClone shares. The next day, ImClone announced that the Food and Drug Administration had rejected the company's application for the approval of ImClone's lead product. The government investigated Stewart's trades, the media reported on the investigation, and the value of MSLO stock dropped. Six months later, at a conference attended by investors and others, Stewart briefly defended her trading and gave a forty-minute presentation on MSLO. Stewart was charged in a federal district court with fraud in connection with the purchase and sale of MSLO se­curities. She filed a motion for a judgment of acquittal on this charge. The court granted the motion, concluding that here, "to find the essential element of criminal in­tent beyond a reasonable doubt, a rational juror would have to speculate.” The government contended that Stewart knew she was speaking to analysts and investors at the conference, noted that she be­gan by saying she was embarking on a topic about which her audience was "probably interested,” and timed her statement as the price of MSLO stock was falling. The court stated, however, that "any inference to be drawn from the makeup of the audience must also take into account the fact that Stewart was only one of several representatives of MSLO, and that MSLO was only one of several corporations making presentations at the conference.”

When a criminal securities fraud case is tried to a jury, as the Stewart case was, what is the judge's role with respect to issues to be presented to the jury?

Explanation / Answer

Before I answer the question, I would like to summarize the case once. The details of the case is as follows -

Let's answer the question - When a criminal securities fraud case is tried to a jury, as the Stewart case was, what is the judge's role with respect to issues to be presented to the jury.

It is the function of the judge to deny any opportunity to the jury to operate beyond its province. The jury will not be permitted to go with an opinion or with a conclusion which is formed on the basis of the incomplete information. It will not permit the jury to conclude on the basis of speculation as well. Here the critical point is that, there is no proof of the existence or the non-existence of the doubt to defeat the skepticism on its own will to be proved as guilty.

If there is an evidence, then that evidence should be reasonable enough such that there will be a way out for the judge to take upon a decision on the acquittal. If the evidence is reasonable and which necessarily has a proof of doubt, then the judge requires to give an order for the acquittal, as no other result is permissible within the fixed bounds of the jurisdiction.

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