SEC and Other Investigations of Illegal Trading: Martha Stewart stock dives on more ImClone questions

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Martha Stewart stock dives on more ImClone questions

6/24/2002 11:43:00 AM

NEW YORK, Jun 24, 2002 (AP WorldStream via COMTEX) -- Shares of Martha Stewart Living Omnimedia Inc. plummeted more than 18 percent in morning trading Monday, fueled by more questions about the decorating maven's highly scrutinized sale of stock in ImClone Systems Inc.

Congressional investigators and federal prosecutors are looking into Stewart's sale of nearly 4,000 shares of the biotechnology company on Dec. 27, a day before federal regulators said they would not consider the company's new cancer drug. ImClone's shares subsequently plummeted. Stewart has repeatedly said that her trade was legal and based on information available to the public at the time.

Late Friday, Merrill Lynch announced that it had put Stewart's broker Peter Bacanovic, as well as his assistant, Douglas Faneuil, who handled the ImClone trade, on paid leave. The action was based on discrepancies in statements of the two Merrill Lynch employees, according to the House Energy and Commerce Committee, which is investigating the ImClone case.

The Wall Street Journal reported Monday that Faneuil has offered information that contradicts what Stewart and Bacanovic maintain was the trigger for the sale.

They have said the stock was sold because of a previously arranged sell order to dump the shares when it reached below dlrs 60. Statements from Faneuil, however, shed doubt on whether such an order existed, according to the Wall Street Journal report.

Bacanovic is the broker for ImClone co-founder and former CEO Sam Waksal and his daughter Aliza, as well as Stewart.

Waksal was charged June 12 with insider trading.

Martha Stewart Living Omnimedia's shares have been taking a beating since June 6, when reports surfaced of the congressional probe into Stewart's sale of ImClone stock. They were down dlrs 3.01 Monday, reaching dlrs 12.96 each on the New York Stock Exchange.

Copyright 2002 Associated Press, All rights reserved

-- posted by Kirk