Martha Stewart Indictment

Martha Stewart was indicted for allegedly selling ImClone stock after hearing that Samuel Waksal, the Chief Executive Officer of ImClone and a friend of Stewart's, was trying to sell his shares (Cedarbaum, 2003). Waksal was also a friend of Peter Bacanovic, who was Stewart's stockbroker at Merrill Lynch. The stock is traded on the NASDAQ National Market System administered by the national Association of Securities Dealers, Inc. Stewart sold 3,928 shares of stock in ImClone Systems, Inc., a biological medicines development company, on December 27, 2001, and the following day, the company announced that the Food and Drug Administration had rejected an application by the company for approval of their new cancer fighting drug, Erbitux, which had previously been the company's leading product. After the announcement, the price of the stock fell.

In the beginning of 2001, several government agencies, which included the Securities and Exchange Commission (SEC), the FBI, the United States Attorney's Office for the Southern District of New York (USAO), and a congressional subcommittee initiated an investigation of Stewart's sale of her ImClone stock on December 27 (Cedarbaum, 2003). The investigation came to the attention of the media, who began issuing reports on the matter, and Stewart made public statements denying any wrongdoing and giving her recollections the facts surrounding the sale of the stock.

On June 23, 2002, Stewart sent an email to Andrew J. Nussbaum, an a

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g also testified that Stewart later ordered her to change the message back to its original state, but by then, the prosecutors said, the damage had been done because Stewart had made false statements to government investigators and by doing so, had obstructed justice. Throughout the trial, the Government portrayed Stewart as a liar who had conspired with her stockbroker to cover up that she had sold her ImClone stock in December, 2001 after learning that Waksal and his two daughters were selling thousands of shares they held in the company (Lazaroff, Skertic and Countryman, 2004). Waksal was convicted in 2003 of insider trading and is serving a seven-year sentence in a federal prison. They charged that Stewart learned about the Waksals' selling their stock through conversations with Bacanovic's assistant, Douglas Faneuil. The most damaging testimony came from Stewart's friend, Mariana Pasternak, who testified that Stewart told her shortly after she sold her ImClone stock that she had been aware that ImClone founder Sam Waksal was trying to get rid of his shares (Martha, 2004). In a separate conversation with Stewart, Pasternak testified, Stewart told her it was nice to have broker's who tell you those things. However, i

Category: Government - M