Report contradicts Martha Stewart’s story

Report contradicts Martha Stewart’s story

The Associated Press

Report contradicts Martha Stewart’s story

INSIDER TRADING: House probe finds that her broker had no record of a “stop-loss” order for stock.

WASHINGTON — Congressional investigators reviewing documents concerning Martha Stewart’s sale of ImClone stock have found no credible record of an arrangement with her broker to dump her shares when thestock fell below a certain price, according to a magazine report.

House Energy and Commerce Committee investigators are examining whether Stewart had inside information when shesold nearly 4,000 shares of ImClone on Dec. 27 and have obtained her account through her lawyers.

Investigatorsmay want to talk to Stewart directly following an interview with her broker, Peter Bacanovic, a committee spokesman said Sunday.

“We’ve heard Miss Stewart’s side of the story and now we want to hear Mr. Bacanovic’s,” Ken Johnson said. “If the stories are in conflict, then there’s the possibilitywe could question her further.”

Asked whether Stewart would be called to testify before the committee, Johnson said there are no plans to hold additional hearings.

Records provided by Merrill Lynch & Co. and reviewed last week by committee investigators show no credible record of a “stop-loss” order to sell Stewart’s shares when they fell below $60, Newsweek reported Sunday.

Johnson would not comment on that report.

Representatives of Stewart and Bacanovic could not immediately be reached for comment Sunday.

Major brokerage firms typically keep detailed records of such orders and it would be unusual for there to be no record. In repeated public statements, Stewart has pinned her innocence to the existence of this stop-loss agreement, which she said was done verbally. She has insisted the trade was lawful and done based on public information.

Stewart and the broker have differed on when the stop-loss order was put in place, but both have said it was in advance of the day the stock was sold.

The House committee has been investigating sales of ImClone shares by relatives of former company chief executive Samuel Waksal and Stewart,a friend of Waksal. The sales came a day before the Food and Drug Administration announced it had rejected ImClone’s approval application for the colorectal cancer drug Erbitux. FBI agents arrested Waksal on June 12 on charges of securities fraud and conspiracy for allegedly tipping family members to sell their stock. He invoked the Fifth Amendment the next day at a hearing by the House panel and refused to answer questions.

The House panel’s investigative subcommitteehas requested and received documents related to trades madeby Bacanovic and his assistant, Douglas Faneuil, from Dec. 26-28.

Copyright Copley Press Inc. 2002

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