Reference no: EM131146210

Samuel Waksal, chief executive officer of ImClone Systems, Inc., and Martha Stewart, chief ex­ecutive officer of Martha Stewart Living Omnimedia (MSLO), were clients of stockbroker Peter Bacanovic. When Waksal began selling his ImClone stock. Bacanovic allegedly had Stewart informed, and she sold her ImClone shares. The next day, ImClone announced that the Food and Drug Administration had rejected the company's application for the approval of ImClone's lead product. The government investigated Stewart's trades, the media reported on the investigation, and the value of MSLO stock dropped. Six months later, at a conference attended by investors and others, Stewart briefly defended her trading and gave a forty-minute presentation on MSLO. Stewart was charged in a federal district court with fraud in connection with the purchase and sale of MSLO se­curities. She filed a motion for a judgment of acquittal on this charge. The court granted the motion, concluding that here, "to find the essential element of criminal in­tent beyond a reasonable doubt, a rational juror would have to speculate.” The government contended that Stewart knew she was speaking to analysts and investors at the conference, noted that she be­gan by saying she was embarking on a topic about which her audience was "probably interested,” and timed her statement as the price of MSLO stock was falling. The court stated, however, that "any inference to be drawn from the makeup of the audience must also take into account the fact that Stewart was only one of several representatives of MSLO, and that MSLO was only one of several corporations making presentations at the conference.”

When a criminal securities fraud case is tried to a jury, as the Stewart case was, what is the judge's role with respect to issues to be presented to the jury?