Given the current state of my reputation, along with the other considerations laid out below, readers may want to take everything I say with a grain of salt. There are literally dozens of reasons why my observations about these proceedings might be biased.
First, although I don't want to insult Martha Stewart by drawing comparisons—my "story" is, at its most mythical, only a faint echo of hers—there are obviously parallels. Like Stewart, I was, for a while, bathed in the golden glow of prosperity, a symbol of American capitalism and the optimism of the Internet Age, and, now, like Stewart, in the harsh light of the bust, I am seen by some as a symbol of "excess," a "fallen star," a "disgrace." Like Stewart, I have been charged with securities fraud. Like Stewart, I have been the object of adulatory and venomous press coverage. Like Stewart, I have had the bizarre experience of watching legions of people I have never met come to trust me, look to me for guidance, regard me as a "guru," and then decide that I am, in fact, a scumbag.
About a year ago, in connection with a wide-ranging investigation into conflicts of interest between the research and investment banking divisions of Wall Street brokerage firms, I was accused of civil securities fraud. One of the agencies that charged me, the Securities and Exchange Commission, has also filed a civil insider-trading charge against Martha Stewart. In my case, the SEC alleged that, among other things, my research team and I made some statements in e-mails that were inconsistent with our published research reports. Along with other defendants, I settled the charge without admitting or denying the allegations, agreed to pay a fine and "disgorgement" totaling $4 million, and agreed to a permanent prohibition against working in the securities industry. (Click here to read the SEC's complaint and here to read the SEC's press release about the settlement.)
One of my former employers, Merrill Lynch, is also a former employer of Martha Stewart's stockbroker, co-defendant, and alleged co-conspirator, Peter Bacanovic. I don't know Bacanovic, but some of my former colleagues do. Furthermore, two of Martha Stewart's lawyers, Bob Morvillo and Jack Tigue, represented Merrill in connection with the research proceedings described above. I still have professional relationships with Merrill, Morvillo, and Tigue. I also still have professional relationships and/or agreements with parties on the regulator-prosecutor side of the aisle.
Next, I have pre-existing impressions of Martha Stewart that are, on balance, positive. For one thing, I admire her decision to fight the charges. Given how much she has lost already—her job, her reputation, her board seats, two years of her life (and counting), and some $400 million of her net worth—she must have been tempted to settle, especially given the massive amount of time, effort, money, stress, and luck that will be required for her to achieve even the Pyrrhic vindication of an acquittal. (In this country, we can indeed get "our day in court"—and this alone is cause to wave the flag around—but it is no mystery why people sometimes plead guilty to crimes they didn't commit.)
I don't know Martha Stewart personally, but I have met her on two occasions. The first was in a business meeting. I sat next to her, and halfway through the meeting, she turned to me and kindly offered to "marry me off." The second was a few years later, when I was already under investigation but before she was. My wife (I had managed to marry myself off, eventually) and I were carrying our 3-month-old daughter out of a New York restaurant just as Martha and her daughter were walking in. I would like to say that my daughter aced this first brush with celebrity by smiling sweetly or cooing a proto-hello, but she didn't. Instead, she barfed on Martha's shoes. Given that even a person of average temperament might have found this annoying, let alone someone with a reputation for being, well, impatient, I was grateful for the good humor that Martha displayed (she even helped clean up the mess). I should add that I find Martha Stewart not only charming but physically attractive. Studies have shown that human beings tend to be favorably disposed toward people they find charming and attractive.
Lastly, I admire Martha Stewart's business accomplishments, especially her having built a high-quality company that now employs more than 500 people. After watching thousands of smart, talented entrepreneurs try to do this and fail, I have a sense of how hard it is. I consider it so hard, in fact, that I find many of the common jabs at Martha ("arrogant," "control freak," "workaholic," "demanding," "bitch") so petty as to border on the absurd. Anyone who can manage the pressures, responsibilities, and hassles of running a major corporation without occasionally evoking such descriptions should be beatified. Lest this make it sound as though I admire all business success and anyone who achieves it, I don't. On the contrary, in my career, I have met plenty of conceited, incompetent (though well-compensated), rude, selfish, and unethical sleazebags, many of whom I would be thrilled to see get a legal and moral comeuppance. I am not sure that the density of such people is much greater in business than it is in other professions, though.
Martha Stewart sits at the same intersection of ethics, law, celebrity, politics, the stock market, and post-crash schadenfreude as I once did, and I am writing about her, in part, because I feel a sense of empathy, and, in part, because I believe (or at least hope) that my experiences give me insight into her situation. I believe that Stewart should be treated as innocent until proven guilty (and also that many observers are not treating her this way). But I also believe that lying to investigators and shareholders is and should be a crime, and that, if Stewart did this, she should have to take responsibility for it. In covering her case, I will try my best to evaluate the evidence in a fair-minded way.