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American Morning
What is Martha's Role Now?
Aired June 05, 2003 - 07:37 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: The company still bears her name, but Martha Stewart is no longer chairman and chief executive officer of the firm that she founded.
For more on this, Andy Serwer joins us from Winston-Salem, North Carolina. He's on assignment, but we have tracked him down.
Andy, good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning, Daryn.
How are you?
KAGAN: I'm doing good.
I want to talk about the business side of this first, and that's what we were leading with, Martha stepping down from being chairman and CEO. But she's still on the board of the company and she's still founder and chief creative officer.
So, really, how much has she stepped aside?
SERWER: Yes. Well, I don't think that much, Daryn. It's going to be very interesting for the regulators to sort of look over this. You know, if, in fact, she is guilty of these charges, she may not be able to serve as an officer of a public company. Now, as chief director -- chief creative director, she won't be doing that. But how much influence will she have over the company?
Her long time protege, Sharon Patrick, is the CEO. If you've seen that footage of her and another woman high giving each other at the New York Stock Exchange, that's Sharon Patrick. Obviously they have a very close relationship. She's also the largest shareholder of the company. So she will have a tremendous amount of influence over the company.
Will the regulators let this fly, that's going to be a very interesting question, indeed.
KAGAN: A couple of legal matters working here. You have the criminal and civilian lawsuits. You also have the matter by the SEC. But not everywhere does it include insider trading charges.
What's up with that?
SERWER: Well, I think what's happening there, Daryn, is that the case in terms of insider trading, when it comes to a criminal nature, was too hard for the Feds to pursue. They really realized that trying to nail her on that charge would be too difficult.
The civil charges are softer, if you will. Insider trading is extremely difficult to prove. We've seen that over and over through the years. But altering the phone message, which is what she's accused of doing, is more of a straightforward thing. If they can show that she did that, well, then you're lying, then you lied to investigators. That's why they're going after that. It's kind of an easier road for them.
KAGAN: And just finally, what I find kind of mind boggling, the stock, through all of that, it went up $0.50 yesterday.
SERWER: Yes, I think that's an aberration. I mean it went up a little bit because some uncertainty was taken out of the picture in terms of the indictment was actually handed down. I think also the fact that she wasn't hit with insider trading on the criminal end may have had something to do with it.
But today, Daryn, I would not bet on that stock going up. I mean she's stepped down as CEO and I think the stock could take a hit this morning.
KAGAN: All right, we will be tracking it.
Andy Serwer in North Carolina.
Andy is minding your business.
Thanks, Andy.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired June 5, 2003 - 07:37 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: The company still bears her name, but Martha Stewart is no longer chairman and chief executive officer of the firm that she founded.
For more on this, Andy Serwer joins us from Winston-Salem, North Carolina. He's on assignment, but we have tracked him down.
Andy, good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning, Daryn.
How are you?
KAGAN: I'm doing good.
I want to talk about the business side of this first, and that's what we were leading with, Martha stepping down from being chairman and CEO. But she's still on the board of the company and she's still founder and chief creative officer.
So, really, how much has she stepped aside?
SERWER: Yes. Well, I don't think that much, Daryn. It's going to be very interesting for the regulators to sort of look over this. You know, if, in fact, she is guilty of these charges, she may not be able to serve as an officer of a public company. Now, as chief director -- chief creative director, she won't be doing that. But how much influence will she have over the company?
Her long time protege, Sharon Patrick, is the CEO. If you've seen that footage of her and another woman high giving each other at the New York Stock Exchange, that's Sharon Patrick. Obviously they have a very close relationship. She's also the largest shareholder of the company. So she will have a tremendous amount of influence over the company.
Will the regulators let this fly, that's going to be a very interesting question, indeed.
KAGAN: A couple of legal matters working here. You have the criminal and civilian lawsuits. You also have the matter by the SEC. But not everywhere does it include insider trading charges.
What's up with that?
SERWER: Well, I think what's happening there, Daryn, is that the case in terms of insider trading, when it comes to a criminal nature, was too hard for the Feds to pursue. They really realized that trying to nail her on that charge would be too difficult.
The civil charges are softer, if you will. Insider trading is extremely difficult to prove. We've seen that over and over through the years. But altering the phone message, which is what she's accused of doing, is more of a straightforward thing. If they can show that she did that, well, then you're lying, then you lied to investigators. That's why they're going after that. It's kind of an easier road for them.
KAGAN: And just finally, what I find kind of mind boggling, the stock, through all of that, it went up $0.50 yesterday.
SERWER: Yes, I think that's an aberration. I mean it went up a little bit because some uncertainty was taken out of the picture in terms of the indictment was actually handed down. I think also the fact that she wasn't hit with insider trading on the criminal end may have had something to do with it.
But today, Daryn, I would not bet on that stock going up. I mean she's stepped down as CEO and I think the stock could take a hit this morning.
KAGAN: All right, we will be tracking it.
Andy Serwer in North Carolina.
Andy is minding your business.
Thanks, Andy.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
