The Corner

Re: Butterfly Broken On a Wheel

VERY interesting e-mailbag on my Martha Stewart postings. They are running

about 2-1 in support of my pro-Martha position — somewhat to my surprise,

as I thought I was being dramatically contrarian here. Interestingly,

e-mails from professionals in the securities business are pretty solidly

with me — I have appended a good example down below. Points often made:

—It is not against the law to be a rich, obnoxious, not-very-honest woman,

not even if your politics are Clintonian-Democrat.

—Not only was Martha not charged with “insider trading” (whatever THAT is

supposed to be), she was not even charged with lying under oath. She was

not in a court, and not under oath, when the relevant lies were told. Moral

of the story: Tell **N**O**T**H**I**N**G** to a federal investigator.

Instead, open the proceedings by demanding that he tell you which clause in

the U.S. Constitution gives him the right to pry into your private affairs.

Then sit mute till he gives a satisfactory answer (which he can’t).

—If this is all about “protecting the little guy,” what about all the

little guys who held stock in Martha’s company, or K-Mart? I guess those

are the WRONG little guys.

Here is a good e-mail, from a securities professional:

“Dear Derb—I’m an independent stock broker and I primarily manage assets

of retired people. Here is my read on the abuse of the prosecutor’s

discretion that the DOJ has done in the name of ‘protecting the little guy.’

“Since the indictment the MSO has lost roughly 50% of its value. A mere 11%

is owned buy non-insiders, hence the little guy got whacked by about $110

million since the word of the indictment. Yesterday alone outsiders got

whacked by about $22.6 million. The remaining market value of the company,

at about $539 million, leaves the value held in the hands of outside

investors at a bit over $59 million.

“In the government’s glee over protecting the system, it looks likely that

they will destroy the company. Accordingly, outsiders are set to ‘pay’

nearly $170 million in the charge to ‘protect the little guy.’

“Make no mistake, the preponderance of shares in the float are indeed owned

by small individual investors either directly or through mutual funds. So

it looks like the price to investors for justice puts a screwing on ‘the

little guy.’

“I’m all for justice and the Skillings, Lays, Kozlowskis, Ebbers et. al.

deserve their due. The DOJ however, in their attempt to prove that they are

not soft on corporate executives, continue to screw the pooch. Remember

that Arthur Anderson & Co. partners, who were not akin to anything to do

with Enron, offered almost $1 billion that could have gone to employees and

shareholders that got caught by surprise. The DOJ, however, insisted that

all 2600 partners at Andersen be held accountable. Not only did they lose

all of the equity in the firm, but innocents that may have recuperated

something ended up with zero, zilch nada.

“I’m with you on distrusting the power of the government. I’m afraid that,

in their zeal to show how tough they are and ready to protect the system,

they dismiss out of hand more optimal and just solutions. If this is not

directed by the White House it is certainly sanctioned by it – all in the

name of some unthinking form hostile populism. Dubya has many successes in

gunning down bad guys on Wall Street. He needs to be a little bit less

quick on the trigger in the name of fairness and equity.”

Absolutely right, Sir. Govt power is a monster with a large appetite for

human life. If these people take it into their heads to destroy you, they

will. You’ve got a lawyer? They’ve got ten lawyers. You’ve got ten?

They’ve got a hundred.

First they came for the obnoxious rich women….


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