Posted on 06/22/2002 4:18:48 AM PDT by Liz
Martha Stewart's stock sale story came under fresh suspicion yesterday when her broker was suspended by Merrill Lynch after it found evidence that contradicted her claims.
The firm immediately turned over the evidence — information about Stewart's Dec. 27 sale of 3,900 shares of ImClone — to Manhattan federal prosecutors and securities regulators probing insider trading, a source familiar with the investigation said.
Martha Stewart An internal investigation of broker Peter Bacanovic's ImClone trades found information within the past 48 hours that "raised factual issues regarding a client transaction," Merrill said in a statement released yesterday after the stock market closed. Bacanovic and his assistant, Douglas Faneuil, were placed on administrative leave, the company said.
Brokerage house officials declined to discuss the matter, but a source close to the investigation said the "client transaction" was Bacanovic's sale of Stewart's ImClone stock.
Since her close friend and ImClone founder Sam Waksal was busted on insider trading charges June 12, Stewart has insisted she has done nothing wrong.
The queen of homemaking said she had no inside information, but that she had instructed Bacanovic to automatically sell off her ImClone shares when they dipped below $60 under a so-called stop-loss order. He had given a similar explanation.
But Merrill's Law & Compliance Department found specific evidence that "contradicts the contention that a stop-loss order price triggered the sale," the source said.
"There was a different trigger for the sale," the source said.
One federal source said the finding was a significant development in the ongoing probe of insider trading at ImClone.
Late yesterday, Stewart's spokeswoman, Susan Magriono, declined comment. Her lawyer, James Fitzpatrick, did not return a call seeking comment.
Stewart and Bacanovic have given statements about the ImClone transaction to the government: Stewart to the FBI and Bacanovic to the Securities and Exchange Commission, sources say.
If the Merrill evidence contradicts those statements, both could face the potential of criminal charges. Stewart's friend Waksal was charged with perjury for allegedly lying to the SEC about his family's ImClone stock trading.
Congressional investigators looking at the ImClone scandal yesterday said they would request more documentation.
House Energy and Commerce Committee spokesman Ken Johnson said Merrill discovered discrepancies in the statements of Bacanovic and Faneuil as they prepared to testify before the committee next week.
Johnson said it was "peculiar" that Stewart and Bacanovic claimed to have an oral stop-loss order, which are usually executed in writing.
"This action only confirms our suspicions that we are on the right track and getting very close to the truth," Johnson said.
The action came hours after the House committee made a broad-reaching demand that Merrill hand over all its records on ImClone trades from Dec. 3 to Dec. 28, the day the Food and Drug Administration publicly rejected ImClone's anti-cancer drug and sent its stock into a tailspin. Once as high as $75, it closed yesterday at $8.70.
House investigators also demanded Bacanovic's client list, his cell phone numbers and names of helpers, and any record of Bacanovic's communications regarding ImClone.
*****
The ImClone insider-trading scandal continued to batter Martha Stewart in the stock market yesterday.
For the second day in a row, shares in Martha Stewart Living Omnimedia dipped — this time by 21 cents. Stewart owns 31 million shares in the company, so she lost $6.5 million.
Though she made up some lost ground earlier in the week, the stock is down a total of $3.26 since the scandal broke. That translates into a $101 million overall loss for Stewart.
Yeah, like a sell at market order.
Someone wake me if she is going to be sent to prision.
Nothing against Martha Stewart here, personally I'd rather not see her in jail.
And insider trading could be punishable by 20 years in jail.
Martha Stewart is Hillary Clinton in drag.
Eaker
No paper trail for these criminals.
"Justice is blind" ...............blind to the wrongdoing of the privileged.......
If it's not drugs then she is one sicko. People with no visible sense of humor and talk without a flicker of emotion or personality in their delivery really scare me.
Hillary is another good example, as was Hitler, and especially Dukakis.
Good old Dukakis. Now there was one fun-loving, party dude!
However, the Stewart shows both on the Food Network and on the Network are educational and clean. Ms Stewart has spent her life showing the world that their is beauty in the simple things of life. This is something that the idiot boomers of the 60s had destroyed for Americians. She taught us that doing a job well is a goal we should all aspire to. Those good things which Stewart presents everyday is a rarity in today's TV porn shop presentations.
I am angry with Stewart for doing this; I don't believe her for a minute when she said she was not on the inside of this fiasco. However, I am sick at heart at what she has done to her fans and her career.
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