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American Morning

Minding Your Business: Moving Martha Out?

Aired October 23, 2002 - 08:46   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.


JACK CAFFERTY, CNN ANCHOR: Well, we have not had a chance to update out the Martha Stewart story for a day or two, and a day without Martha is a day without a skin rash or something, I don't know. Anyway, Martha Stewart, living without Martha Stewart could happen, because they are going after her, apparently. At least so far, just civil charges, but she is under the gun and they may ask her to pack up her stuff and get.
ANDY SERWER, "FORTUNE" MAGAZINE: That's right. Just to bring people up to speed on this thing, Jack. The papers reporting the other day that she received a Wells Notice. What is a Wells Notice? That's when the Securities and Exchange Commission basically says we're coming after you. What do you got to say about it. This happened in September apparently. Today in the papers, all sorts of speculation. There is that picture of her at the stock exchange. They don't like to see that anymore down there..

CAFFERTY: I bet they don't.

SERWER: They don't like to be reminded of that.

CAFFERTY: She was on the board of directors there, also.

SERWER: She was on the board. She stepped down recently. So, the papers today are full of stories. What is going to happen to Martha Stewart, what's going to happen to this company? And there is really a wide range of possibilities here, Jack. Basically, she is probably going to face some sort of civil charges. There you can see. Whoops, we're going to bring that back up? A replay. I want to put that back up there.

CAFFERTY: I didn't have time to read that.

SERWER: She's going to have to repay -- she may have to repay the gains from the stock sale, that's number one. Penalties that she could face on top of that. And most interesting, if the SEC does charge her, she will either have to probably step down at least temporarily or maybe permanently as CEO of the company.

CAFFERTY: Can they force her out?

SERWER: They can.

CAFFERTY: She does own a few shares.

SERWER: Right, See, but, that's what is so interesting. She has basically three roles. She's the CEO, she's the controlling shareholder and also she is the product. She is the company itself, there you go. She owns 30 million shares and she controls 63% of the company.

CAFFERTY: Well, how can they force her out?

SERWER: So they can't really -- well, they can say that she's unfit to serve as the chief executive officer, but she would still control the company, which is -- this is a very unusual situation, isn't it?

CAFFERTY: Yeah.

SERWER: But being a CEO is very, very important to Martha, because she likes being a member of the club. But it is true she could still be the person on TV, she could still do the magazine, and she could still control the stock. She just couldn't run the company. Interestingly, we saw some quotes the other day from some readers, some fans, and they said, this one woman saying, I don't care if she's amoral. I know she is a horrible person, but I still want to buy the magazine and watch the show.

CAFFERTY: They want to buy the stuff and they like the recipes and everything.

SERWER: Right.

CAFFERTY: However, is there anything to the theory that the Wells Notice also carried a cancellation notice to membership to members in the club, 'cause, you know?

SERWER: Well, that's a possibility. We're just going to have to see. But probably about two weeks or less even, we will find out. And then of course, there could be criminal penalties coming from the Justice Department.

CAFFERTY: We haven't heard from the Justice Department yet.

SERWER: Absolutely, right.

CAFFERTY: Andy Serwer, Minding Our Business, editor at large, Fortune Magazine.

SERWER: Thank you.

CAFFERTY: Good to see you.

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 October 23, 2002 - 08:46   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR: Well, we have not had a chance to update out the Martha Stewart story for a day or two, and a day without Martha is a day without a skin rash or something, I don't know. Anyway, Martha Stewart, living without Martha Stewart could happen, because they are going after her, apparently. At least so far, just civil charges, but she is under the gun and they may ask her to pack up her stuff and get.
ANDY SERWER, "FORTUNE" MAGAZINE: That's right. Just to bring people up to speed on this thing, Jack. The papers reporting the other day that she received a Wells Notice. What is a Wells Notice? That's when the Securities and Exchange Commission basically says we're coming after you. What do you got to say about it. This happened in September apparently. Today in the papers, all sorts of speculation. There is that picture of her at the stock exchange. They don't like to see that anymore down there..

CAFFERTY: I bet they don't.

SERWER: They don't like to be reminded of that.

CAFFERTY: She was on the board of directors there, also.

SERWER: She was on the board. She stepped down recently. So, the papers today are full of stories. What is going to happen to Martha Stewart, what's going to happen to this company? And there is really a wide range of possibilities here, Jack. Basically, she is probably going to face some sort of civil charges. There you can see. Whoops, we're going to bring that back up? A replay. I want to put that back up there.

CAFFERTY: I didn't have time to read that.

SERWER: She's going to have to repay -- she may have to repay the gains from the stock sale, that's number one. Penalties that she could face on top of that. And most interesting, if the SEC does charge her, she will either have to probably step down at least temporarily or maybe permanently as CEO of the company.

CAFFERTY: Can they force her out?

SERWER: They can.

CAFFERTY: She does own a few shares.

SERWER: Right, See, but, that's what is so interesting. She has basically three roles. She's the CEO, she's the controlling shareholder and also she is the product. She is the company itself, there you go. She owns 30 million shares and she controls 63% of the company.

CAFFERTY: Well, how can they force her out?

SERWER: So they can't really -- well, they can say that she's unfit to serve as the chief executive officer, but she would still control the company, which is -- this is a very unusual situation, isn't it?

CAFFERTY: Yeah.

SERWER: But being a CEO is very, very important to Martha, because she likes being a member of the club. But it is true she could still be the person on TV, she could still do the magazine, and she could still control the stock. She just couldn't run the company. Interestingly, we saw some quotes the other day from some readers, some fans, and they said, this one woman saying, I don't care if she's amoral. I know she is a horrible person, but I still want to buy the magazine and watch the show.

CAFFERTY: They want to buy the stuff and they like the recipes and everything.

SERWER: Right.

CAFFERTY: However, is there anything to the theory that the Wells Notice also carried a cancellation notice to membership to members in the club, 'cause, you know?

SERWER: Well, that's a possibility. We're just going to have to see. But probably about two weeks or less even, we will find out. And then of course, there could be criminal penalties coming from the Justice Department.

CAFFERTY: We haven't heard from the Justice Department yet.

SERWER: Absolutely, right.

CAFFERTY: Andy Serwer, Minding Our Business, editor at large, Fortune Magazine.

SERWER: Thank you.

CAFFERTY: Good to see you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com