WPO: Note Appears to Back Stewart; But Investigators Still Have Doubts About
(Washington Post 07/02 04:46:32)
Her Explanation
Publication Date: Tuesday July 2, 2002
Financial; Page E03
Copyright 2002, The Washington Post Co. All Rights Reserved
By Ben White
Washington Post Staff Writer
NEW YORK, July 1 -- Merrill Lynch & Co. has turned over a document to
congressional investigators on which Martha Stewart's broker wrote the
figure "$60," an apparent reference to the price at which he planned to sell
Stewart's shares in ImClone Systems Inc., a congressional official said
yesterday.
The notation seems to back up the claim by Stewart and the broker, Peter
Bacanovic, that the Dec. 27 sale wasn't based on inside information.
Congressional investigators, however, do not believe the document exonerates
Stewart, the official said. That's because Bacanovic's assistant, Douglas
Faneuil, told Merrill Lynch lawyers that no "stop-loss" order to sell the
shares at $60 ever existed and that Bacanovic had urged him to lie and say
one did.
The investigators also say they have no way of verifying when the document
with the $60 notation was created.
An attorney for Bacanovic, Richard Strassberg, declined to comment.
Prosecutors from the U.S. attorney's office in Manhattan, the Securities and
Exchange Commission, and Congress have been investigating why Stewart sold
her 4,000 ImClone shares the day before the firm announced that the Food and
Drug Administration had rejected its application for a cancer drug.
Stewart is a friend of ImClone co-founder and former chief executive Samuel
Waksal. Waksal was charged last month with insider trading for allegedly
tipping off his father and his daughter Aliza that the FDA rejection was
coming, allowing them to sell about $10 million worth of ImClone shares just
before the stock began a sharp decline Dec. 28, after the FDA announcement.
Bacanovic was also the broker for both Samuel and Aliza Waksal.
According to documents compiled by the House Energy and Commerce
subcommittee on oversight and investigations, Bacanovic and Stewart talked
around 1 p.m. on Dec. 27, after Aliza Waksal had sold her ImClone shares.
Bacanovic had left a message for Stewart earlier that day, saying he thought
ImClone would be "trading lower."
Legal experts said Stewart could face insider-trading charges if Bacanovic
told her anything about the imminent FDA rejection or that the Waksals were
selling because of impending bad news. Both Stewart and Bacanovic could face
obstruction charges if they concocted the $60 stop-loss story.
(END)
04:21 EDT July 2, 2002 |
