What Did Martha Know?

Jun 24, 2002
George Anderson

A Merrill Lynch & Co. sales assistant who handled a controversial trade of ImClone Systems Inc. stock for Martha Stewart provided new information late last week that contradicts the reason she and her broker gave for selling the stock when they did, reports The Wall Street Journal.

Ms. Stewart sold shares of the biotech stock on December 27, one day before the company announced that the Food and Drug Administration had refused to consider an application for its experimental cancer-fighting drug, Erbitux. She and Merrill broker, Peter Bacanovic, claim to have sold her shares of Imclone because of a previously arranged “stop-loss order.” Merrill officials now have doubts based on statements by sales assistant Douglas Faneuil, who was unaware that the stop-loss order existed.

Earlier this month, ImClone’s former chief executive, Samuel Waksal, was charged with insider trading for allegedly tipping off family members and trying to sell his own shares before the FDA’s news was made public. Ms. Stewart is a close friend of Mr. Waksal, who at one point dated Ms. Stewart’s daughter.

Moderator Comment: Will the continuing bad press surrounding Martha Stewart’s financial dealings have a negative impact on products sold under her name?

We need the “Queen of Mean” Leona Helmsley to answer this one. [George Anderson – Moderator]

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