In 2001, Martha Stewart sold all of her shares of the biotech company, ImClone. Just two days
later, ImClone’s stock fell 16% after it was publicly announced that the FDA had not approved
ImClone’s primary pharmaceutical product, Erbitux. Stewart and Bacanovic “willfully and
knowingly” worked together to obstruct justice and make false statements in the stock trading
scandal. The case was all about insider trading and because of that in 2004, famous
businesswoman and TV personality Martha Stewart served five months in federal prison.
How might you characterize Martha Stewart’s initial public relations response to the charges
against her?
I would describe Martha’s initial reaction as ashamed. She was ashamed that she had ben
caught, which is why she never admitted to committing a crime. She stayed in denial and still
has not admitted to her wrongdoings still today. She did not have much to say probably
because she was afraid that if she did speak she would say the wrong thing. It was smart move
for her to go ahead and do her time, but I believe it was all an act, she wanted to appear strong
and tough, but what she was, was guilty, found by the courts and she knew herself that her
actions were illegal.
What key public relations principle did Martha Stewart violate?
She lied. She had her PR team tell the press that she had already planned on selling the shares
and acted as if she had not received inside information so that she would not lose thousands of
dollars. After lying she was not open with the people about her actions whether they were
genuine or not, which makes people think she is guilty. She denied it; key role in Public
Relations is to never lie.
Had you been advising her, what public relations strategy and tactics would you have
recommended? How “vocal” should she have been?
As bad as it is that Martha Stewart has still not admitted to her wrongdoing, she still is doing
very well for herself. She has a popular show with Snoop Dogg that is doing very well on
television right now. Had I been advising Martha, I would know whether she acted illegally or if
she had genuinely sold the shares with no illegal intentions. I would recommend Martha to be
open to her audience whether she did commit the crime or not. Either way, people appreciate