Stewart's Broker Gives Phone Records
Stewart's Broker Gives Phone Records
Jul. 16, 2002
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NEW YORK (AP) _ Martha Stewart's broker, who has emerged as a key link in the ImClone trading scandal, avoided charges of contempt of Congress, and handed over his home phone and cell phone records for December to Congressional investigators late Monday.
``We met the deadline,'' said Melissa Berenson, a spokeswoman for Richard Strassberg, the attorney representing Peter Bacanovic.
On July 8, the House Energy and Commerce Committee, which is investigating the ImClone Systems Inc. trading scandal, issued a subpoena to Bacanovic threatening him with contempt of Congress if the records weren't delivered by July 15.
Bacanovic worked at Merrill Lynch & Co. and orchestrated Stewart's highly scrutinized sale of nearly 4,000 shares of ImClone on Dec. 27, the day before the Food and Drug Administration announced publicly that it had rejected the biotech company's application to review its cancer drug Erbitux. The shares subsequently plummeted.
Congressional investigators are hoping to clear up conflicting accounts of what happened. They also want to find out whether Bacanovic contacted any of his other clients, who also had ImClone shares.
``Our investigators are currently reviewing the phone records and are trying to determine who he called, and when he called them,'' Ken Johnson, a committee spokesman said Monday. ``We are matching up phone records with his client list.''
He declined to comment on how long it would take for investigators to determine what exactly happened.
Stewart, chief executive of Martha Stewart Living Omnimedia Inc., is a personal friend of Sam Waksal, the former ImClone CEO who was arrested June 12 on charges of insider trading for allegedly trying to sell his stock and tipping off family members after learning of the FDA's decision.
Stewart has repeatedly denied any wrongdoing.
Bacanovic is the broker for Waksal and his daughter Aliza, as well as Stewart.
Bacanovic was on vacation in Florida on Dec. 27, but Stewart's trade was executed by his assistant Douglas Faneuil. Johnson declined to comment on whether Stewart did speak with Bacanovic that day.
Bacanovic, along with his assistant, were placed on paid leave by Merrill Lynch late last month, after an investigation that revealed discrepancies in their statements.
Stewart has maintained that she had a prearranged agreement with Bacanovic to sell ImClone stock when it fell below $60.
Congressional investigators, however, doubt that the ``so-called stop loss order'' ever existed, particularly after Faneuil acknowledged that he knew of no such arrangement. He had initially supported Stewart's and Bacanovic's claim after being pressured by the broker.
Johnson also confirmed on Monday that several key ImClone officials, including the company's top lawyer, John Landes, sold shares weeks before even the domesticity maven bailed out.
Johnson confirmed that Landes sold 2.5 million shares on Dec. 6, while Ronald Martell, the vice president of marketing, sold 2.1 million shares five days later.
From Dec. 12 to Dec. 21, four other unnamed executives dumped ImClone stock, he said.
Johnson said that after Sam Waksal returned from his vacation in the Caribbean on Dec. 26, he made a number of calls, including one to Landes, with whom he had the longest conversation. Johnson said the committee is trying to determine whether the two were talking about FDA's impending decision, or how to dump Waksal's shares.
``Everyone but the mailroom boy was dumping ImClone stock,'' said Johnson. ``It's hard to believe that everyone decided it was time to sell. We are convinced that someone was passing along inside information.''