From the article:

What the jury felt Martha Stewart did — lying about having received inside information before she traded — is wrong, really wrong. And the fact that so many on Wall Street have unashamedly risen to her defense is galling — galling because what she did actually harms the market. Wall Street leaders should be expressing chagrin that a corporate tycoon — who was also a member of the New York Stock Exchange board — could feel free to fleece an unwitting buyer.

Virtually everybody who takes Ms. Stewart's side conveniently ignores the fact that there was some poor schmo (or schmoes) out there who bought her shares of ImClone. Those buyers, no matter how diligent, no matter how much market research they read, no matter how many analysts' reports they studied, could not have known what Martha Stewart did: that the Waksal family was dumping shares. In my book, that's fraud. Martha Stewart ripped her buyers off as certainly as if she'd sold them silk sheets that she knew were actually synthetic.
This is the heart of it. If you think, with Turow, that this is wrong, then you think that insider trading should be illegal. I don't think it's wrong.

What Turow elides is that the poor "schmos", as he calles them, would have bought the stock regardless of what Martha Stewart did. Her decision to sell had nothing to do with their decision to buy, nor would her deciding not to sell have saved them any money.

The other problem is that Turow has no idea whether the people trading that afternoon were schmos or market professionals. Nor does it matter, other than for Turow's appeal to our emotions. Insider trading can not possibly be a crime unless the market it somewhat efficient -- that is, the price incorporates publicly held information. Otherwise, the government could never show that withholding information made a difference to the price paid or received. But if the market is efficient, than it makes no difference whether the buyer was a tyro or Warren Buffett -- both would buy through the market at a price that reflected the public information.

Finally, all this guff about keeping up the little guy's faith in the market is nonsense. I've talked to lots of "little guys", and none of them think that they're getting the same deal as CEOs and Wall Street insiders. And they're right. The problem, though, isn't insider trading. It is access to IPOs and (Buffet's forte) cutting direct deals at sweetheart prices, and other opportunities not available to the average investor.

This is very confusing to me.

So far as I can tell, she was never tried and convicted of having received inside information.

The agent(s) having assumed that and then asked her point blank. She said no. She was not under oath. They said you lied. She was then convicted of lying about a crime that she has not been tried for, never mind convicted.

Moral of the story. If an agent of the US government asks you "Are you having a nice day?", refer him/her/it to your lawyer or expect to be tried and convicted of lying.

Uncle Bill:

Just don't lie to investigators--it's obstruction of justice.

Uncle Bill --

It's a little more complicated than that. She told the investigators a couple of things that the jury found not to be true, like that she didn't remember talking to the assistance at Merril Lynch that day.

Turow's problem is that he comes awfully close to suggesting that it's wrong for a person with better knowledge to sell or buy at the same time as a person with lesser knowledge buys or sells. That's (a) ridiculous, (b) unenforceable and (c) a recipe for market meltdown.

I'm not defending Ms. Stewart either, but Merril Lynch is a significant market maker in IMCL and trades shares for its own account. It's not unlikely that they're the 'poor schmos' who bot her stock initially. Probably long enough to get an uptick and go short against the box. So did Merril's trading floor, by virtue of seeing huge sell orders coming in from significant stock holders, have implied "insider information"?

And, as Donald Luskin notes, "Today, IMCL closed at $74.34. It's hit $80.35 recently (April 27). So those "poor schmoes out there who bought her shares of ImClone" for $60 in December 2001 could have made 33% in 28 months -- not a bad rate of return."