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Strategies & Market Trends : Take the Money and Run -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (15749)	8/21/2002 7:29:46 PM
From: Alan Smithee	Read Replies (2) \| Respond to of 17639

Martha Stewart had a bad day. Martha Stewart Living Officers Are Accused of Insider Trading A lawsuit was filed Wednesday against Martha Stewart and other officers of Martha Stewart Living Omnimedia Inc., alleging they sold company stock before the shares plunged on news that the home-decorating maven was being investigated for possible insider trading involving her holdings in ImClone Systems Inc. The investigation so far has focused on whether inside information obtained from former ImClone Chief Executive Samuel Waksal allowed Ms. Stewart to sell all of her 4,000 ImClone shares on Dec. 27, one day before news regarding the company sent the stock plummeting. The suit, seeking class-action status, was filed by New York law firm Milberg Weiss Bershad Hynes & Lerach LLP on behalf of purchasers of the securities of Martha Stewart Living between Jan. 8, 2002 and July 24, 2002. The suit alleges that Ms. Stewart and her associates sold their shares for $79 million with knowledge "of the fact that Stewart was secretly being investigated for insider trading and that this would severely damage Stewart's image, the company' s most precious asset.'' Martha Stewart Living shares have plunged following revelations in June that prosecutors were questioning Ms. Stewart in connection with possible insider trading in ImClone shares. Ms. Stewart announced Jan. 8 that she had sold three million shares in Martha Stewart Living to ValueAct Capital Partners, now the company's second largest holder behind Ms. Stewart. In March, Palo Alto Venture capital firm Kleiner, Perkins, Caufield & Byers sold two million shares to ValueAct, virtually eliminating its stake in the company. On July 24, Martha Stewart Living slashed earnings estimates for the third quarter of 2002 by half and reduced guidance for the entire year 2002, citing the effects of the ImClone investigation. That same day, the price of Martha Stewart Living stock dropped to below $7.50 per share -- leading to a 60% drop in one month. The stock closed Wednesday at $8.91, down 14 cents, in 4 p.m. composite trading on the New York Stock Exchange. In addition to Ms. Stewart and the company's directors, venture capital firm Kleiner Perkins Caufield & Byers was named as a defendant. Judge John E. Sprizzo will preside in the case. online.wsj.com IMO, this could be much, much worse for Martha than the investigation over the measly few shares of IMCL that she dumped.