Martha Stewart and the Imclone Scandal

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no. 1-0083

Martha Stewart and the ImClone Scandal
On January 20, 2004, jury selection launched the trial of Martha Stewart, Chief Creative Officer and former Chief Executive Officer and Chairman of the Board of Martha Stewart Living Omnimedia (MSO). Nine charges filed by the Federal Grand Jury in New York and the SEC relate to Stewart’s personal sale of $228,000 in ImClone Systems, Inc. stock on December 27, 2001, one day before regulators rejected the biotech company’s cancer drug (Erbitux) and sent its stock tumbling. Communications records show that Stewart placed an 11-minute cellphone call to her assistant at 1:31 P.M. EST on December 27 to check her messages. The call was registered moments after Stewart’s chartered private jet
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No formal stop-loss order was ever recorded: shares of ImClone indeed dipped below the alleged stop-loss price of $60 in the period since Stewart claims having affected that order, and none of Stewart’s ImClone stocks were automatically sold. Bacanovic’s hand-scribbled notation of “stop loss order… @$60” on Stewart’s Merrill Lynch worksheet is written in a different ink than other notations on that page. Bacanovic’s assistant, Douglas Faneuil, has pleased guilty to a misdemeanor charge of misleading investigators about the content of his phone call with Stewart on December 27: he is expected to testify that Bacanovic made him lie to corroborate Stewart’s alibi, and that he himself informed Stewart that Waksal was trying to dump his stock that fateful day. Feds also claim that four days before Stewart met with them, she altered her secretary’s phone log, changing the entry for December 27, 2001 to read “Peter Bacanovic re: ImClone,” rather than the actual message “Peter Bacanovic thinks ImClone is going to start trading downward.” Also, in a letter to congressional investigators, Stewart’s lawyers say she talked with Bacanovic himself from the tarmac on December 27, though Bacanovic was on vacation in Miami that day. Select interpersonal communications and coincidences also raise questions for the defense. Phone records register a call from Stewart to
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