There is a lot at stake for all the parties involved in the Erbitux case, including myself. On one hand, if I don’t tell Martha Stewart about Samuel Waksal selling his shares, I could lose my job or be demoted. Since I am new to the industry, this job is a big deal and losing it would also mean losing a lot of my credibility. On the other hand, telling Martha Stewart about what is going on is illegal. Peter Bacanovic is also risking his entire career and future. If he doesn’t try to convey the message to Martha, he will lose his job and her trust. Martha Stewart is going to lose a lot of money if she doesn’t sell the stock. If she does sell the stock, however, she would save some money but, in the long run, if she is caught, she is going to lose all credibility and a lot of money. Samuel Waksal is also going to lose a lot of money and is going to go to jail when he is caught. He won’t be able to get a job that is on par with his current job if he goes through with the insider trading. Also, he is taking part in more serious and illegal things than Martha Stewart, Peter Bacanovic, or myself. Forging documents and insider trading will get him more jail time. The people who have already invested in ImClone are going to lose money; some may even lose their life savings if they invested a lot thinking Erbitux is promising. There are many stakeholders in this situation and it is important for everybody to think about their next step because it could lead to the loss of a lot of profit and even jail time for others.
The main arguments I am trying to counter are Peter Bacanovic’s. When I told him about Samuel Waksal selling his shares, he told me to tell Martha Stewart. When I asked if it was a good idea, he said we have to. He also said that what we were doing is not illegal and when he was covering up the tracks with a stop loss, he said it would all be fine. However, I think he is under the impression that he won’t get caught, which is why he’s risking his entire career for Martha Stewart. He is my boss, which would make it harder for me to stand up to him without suffering the consequences.
I think Peter Bacanovic’s friendship with Martha Stewart is clouding his judgment because it is illegal to tell her about what is going on. Also, trying to cover up the situation will only make things worse. After Martha sells her shares and Peter writes up a stop loss, the SEC will found out and they will go to jail for obstruction of justice. Lying to the government is never the answer. They should just come clean about what they did and face the consequences. Losing Martha Stewart as a client for not telling her is going to be a big loss, but he’ll bounce back from it. He won’t bounce back from going to jail or losing his brokerage license. Nobody will hire him if the scandal gets out and he can forget about keeping his current job. He will not have any credibility in the field