Word: stewart
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Dates: during 2000-2009
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...most controversial charge against her is securities fraud, legal experts say. When the investigation came to light last June, Stewart made several public statements defending her ImClone trade. She denied that she had received any inside information and said she was simply following the $60 sell arrangement she and Bacanovic had discussed. Comey, the U.S. Attorney, said Stewart made these statements "to stop the slide of the stock price" of Martha Stewart Living Omnimedia and deceived shareholders who otherwise would be worried that insider-trading allegations would damage a company built entirely around the image of its namesake. (The stock...
...Stewart simply sold on that advice, securities experts say, she probably would not have faced trouble--though Bacanovic might have. But after hearing about Waksal's order, Stewart, ever the micromanager, tried to reach Waksal herself, leaving a message recorded as "Martha Stewart. Something is going on with ImClone and she wants to know what." Although Stewart didn't learn the reason for Waksal's attempted sale--he had been told that the Food and Drug Administration was about to reject an application for approval of ImClone's key drug, Erbitux--she sold her shares and avoided losses...
Insider trading, however, is not the focus of the criminal charges against Stewart and Bacanovic--that is left to the civil charges brought by the SEC. Several defense attorneys and former prosecutors say it would be difficult to make a criminal insider-trading case against the pair because the government would have to prove that Stewart knew the significance of Waksal's sale when she sold the stock. "It's a tricky case," says Greg Markel, a securities-law specialist at Cadwalader Wickersham & Taft in New York City. A broker passing along a tip from one client to another...
Instead, federal prosecutors are pursuing the claim that Stewart and Bacanovic lied about the trade and faked evidence turned over to prosecutors. The notes Bacanovic made of the portfolio review, for example, include the notation "@60" next to ImClone in blue ink. Prosecutors say that ink is "scientifically distinguishable" from the blue writing on the rest of the page, so it must have been added to bolster the alibi. "That, a jury can understand," says Martin Pollner, a defense lawyer at Loeb & Loeb in New York City. Prosecutors say Stewart altered evidence too. The indictment alleges that she changed...
...officer, rather than company-related conduct, says John K. Carroll, a former securities prosecutor and now managing partner at the law firm Clifford Chance in New York City. While unusual, this charge connects the case to something more than a single stock trade. "It's not just about Martha Stewart's personal fortune," says Robert Mintz of McCarter & English in Newark, N.J. "It's about manipulating the marketplace." The fraud charge also increases the potential prison time; the maximum sentence is 10 years, twice that of the other charges...