Martha Stewart shares fall on ex-ImClone CEO arrest
NEW YORK, June 12 (Reuters) - Shares of Martha Stewart Living Omnimedia Inc. <MSO.N> fell sharply on Wednesday on concerns about Martha Stewart's personal involvement with the the former head of ImClone Systems Inc., who was arrested on insider trading charges, analysts said.
Stewart, the home design and decorating diva, sold about 3,000 shares of ImClone <IMCL.O> shortly before the company's experimental cancer drug was rejected by the Food and Drug Administration.
ImClone's former chief executive, Sam Waksal, was arrested on Wednesday and charged with conspiracy, securities fraud and perjury involving an alleged insider trading scheme in ImClone shares.
Stewart, a former girlfriend of Waksal, has denied any wrongdoing in the matter and, through a company spokesman, has said she was not acting on nonpublic information when she sold her ImClone shares. The company spokesman was not immediately available to comment on Wednesday.
Nevertheless, Wall Street analysts said Stewart's proximity to the insider trading case has shaken investors, pressuring the stock to its lowest level since mid-January. Since her stock sales were first reported late last week, Martha Stewart shares have fallen nearly 21 percent.
In heavy trading this morning, the stock was down $2, or nearly 12 percent, to $15.10, and was among the biggest percentage losers on the New York Stock Exchange.
The stock was falling on "concerns related to Martha Stewart's dealings with ImClone," said George Smith, an analyst at Davenport & Co.
"Shares of the company fell last week when the news of the trades came out," said Brean Murray & Co. analyst Kathleen Heaney. "There's no reason they wouldn't also fall when (Waksal) was arrested."
The importance of Martha Stewart and her image to her company cannot be overstated, analysts said. Any link to a criminal proceeding could have lingering effects.
"If this becomes an issue that spreads beyond Barrons and the Wall Street Journal to People, Time Magazine and Saturday Night Live, that could have a real impact (on the company)," Davenport's Smith said.
06/12/02 11:33 ET |
