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The Honolulu Advertiser
Posted on: Saturday, August 10, 2002

Martha Stewart e-mail probed

By Anne D'Innocenzio
Associated Press

NEW YORK — Martha Stewart's stockbroker asked his assistant, "Has news come out yet?" shortly before the decorating maven ordered a highly scrutinized stock sale, according to records obtained by ABC News' "Good Morning America."

Martha Stewart visited the New York Stock Exchange trading floor last week as questions about a stock sale she ordered grew.

Associated Press

Investigators are probing e-mails and phone messages to determine what Stewart knew when she sold nearly 4,000 shares of ImClone Systems Inc. stock Dec. 27.

That was the day before the Food and Drug Administration made public that it would deny the biotech company's application for a promising drug called Erbitux — an announcement that subsequently sent ImClone shares plummeting.

Stewart, who is chief executive and chairwoman of Martha Stewart Living Omnimedia Inc., has denied any wrongdoing, and said that she sold her shares based on public information.

She has pinned her innocence on the existence of a pre-existing agreement to sell the stock when it went below $60, though conflicting accounts have spurred doubts.

Neither Stewart's spokeswoman nor attorney would comment yesterday.

ABC reported that on the morning of Dec. 27, Merrill Lynch stockbroker Peter Bacanovic — now on paid leave — was asked by the daughter of then-ImClone CEO Sam Waksal to sell her ImClone shares. Bacanovic is also Stewart's broker.

Waksal, who is a friend of Stewart's, was indicted Wednesday on expanded insider trading charges.

Bacanovic, who was in Florida on Dec. 27, was trying to call Martha Stewart within an hour. According to an affidavit obtained by "Good Morning America," one of Stewart's assistants said the call from Bacanovic came in between 10 a.m. and 11 a.m. Stewart, however, was on a private plane and was unreachable.

As Bacanovic and his assistant Douglas Faneuil waited for Stewart's plane to land, they swapped e-mail, copies of which were obtained by "Good Morning America." In his e-mail, Bacanovic writes at 1:17 p.m.: "Has news come out yet?" Faneuil's reply: "Nothing yet. I'll let you know. No call from Martha either."

At 1:30 p.m. when Stewart's plane landed, "Good Morning America" reports that she immediately called her office, where her assistant had earlier logged the message:

"Peter Bacanovic thinks ImClone is going to start trading downward."

Almost immediately, Stewart was on the phone to Bacanovic's office, according to "Good Morning America."

Eleven minutes later, the broker sold all of Stewart's ImClone stock.

Jim Greenwood, R-Pa., said on "Good Morning America" yesterday that Congressional investigators don't know what Bacanovic said to Stewart during their phone conversation.

He said the House Energy and Commerce Committee has tried to get Bacanovic and Faneuil to meet with investigators, but both have declined through their lawyers.