Professor Bainbridge...on law, politics, religion, culture & food

Does Martha Stewart have a 1st Amendment Right to Lie?

Slate's Explainer column weighs in on Martha Stewart's argument that Count 9 of her indictment should be dismissed, inter alia, because it violates her due process and free speech rights. (Link via The Volokh Conspiracy.) Regular readers know that this has been a topic of some interest in this space, including exchanges with O'Sullivan, Smith, and Yin. Our discussion did not focus on the free speech issues, of course, because we were focusing on the prudential and securities fraud questions.

My beef with the Explainer's analysis is that it assumes a factual predicate -- that Stewart lied -- that I doubt can be supported. In my view, what Stewart did simply is not insider trading. Hence, when she denied committing insider trading, she told the truth. In any event, my friend and colleague Eugene Volokh takes the Explainer to task, demonstrating that the Explainer's analysis contains a number of fairly basic errors. Eugene knows the free speech and due process issues far better than I do, so I defer to his assessment that Count 9 could withstand scrutiny on those issues. (I note that Prof. Yin reached the same conclusion.) I continue to believe, however, that Count 9 fails to state a claim for securities fraud and that the whole indictment should not have been brought as a prudential matter. (And, as I've noted before, the judge in her civil case seems to agree!)

Download my overview of insider trading law here.