Martha Stewart Insider Trading Scandal
 

When: December 27, 2001

The facts: Martha sells $228,000 worth of stock in the biotechnology company ImClone. The day before Sam Waksal, a friend of Stewart's and founder of ImClone, sells stock and encourages family members to sell, after learning that ImClone's application for its top cancer drug prospect would be rejected. On June 12, 2002, Waksal is arrested on charges of insider trading and perjury. He pleads guilty. The Justice Department, SEC, and Congress investigate Stewart, who is under suspicion for insider trading. Did Martha know about the rejection before she sold? Martha and broker Peter Bacanovic claim she did not. Doug Faneuil, Bacanovic's assistant, claims they did.

Who knew: "When the Waksal sell orders came in, [Martha's broker Peter] Bacanovic either called Stewart's office himself or had [his assistant] Faneuil call — he himself never spoke to her until after her trade was complete, say those with a knowledge of the matter — and warned that the stock would soon sink. When Stewart called in, she spoke with Faneuil. In the excitement of the moment, Faneuil could very well have said to Stewart that the Waksals were selling — an unethical revelation, perhaps, but not a classic case of insider dealing. He also could have reported that fact in the context of following orders: Peter thinks you should sell because the Waksals are disgorging." —from the July 08, 2002 issue of New York Magazine

 

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Who Knew?: Martha Stewart and her private banker, Peter Bacanovic, shared a gift for seeming to be perfect. But now the ImClone scandal is widening, and an obstruction-of-justice charge might loom. To paraphrase Martha, that's not a good thing. (Landon Thomas Jr. and Beth Landman Keil in the July 08, 2002 issue of New York Magazine)

I Love Martha: If Martha Stewart gets sent away, I'll miss not only her but her genius business model: a media empire built around the idea that Martha could be paid to be Martha. (Michael Wolff in New York Magazine's October 21, 2002 Issue)