Martha Stewart shares hit all-time low price
By Angela Zimm
Bloomberg News
Martha Stewart Living Omnimedia Inc. shares fell to their lowest price ever yesterday, as investigators stepped up scrutiny of Martha Stewart's sale of ImClone Systems Inc. shares, looking at whether she gave inside information to a friend.
Congressional lawmakers are investigating whether homemaking celebrity Stewart sold her own ImClone shares based on inside information and whether she tipped off a friend before the biotechnology company's shares plunged on a regulatory setback, said a spokes-man for the House committee conducting the probe.
House investigators have demanded the records of Stewart's broker, Peter Bacanovic, who was placed on administrative leave Friday by Merrill Lynch & Co.
Stewart has defended as legal the sale of her shares the day before U.S. regulators rejected ImClone's application for its Erbitux cancer drug on Dec. 28. The rejection sent ImClone shares down 84 percent.
Yesterday, shares of Martha Stewart Living dropped $3.42, or 21 percent, to $12.55. The shares have fallen 35 percent since Stewart's ImClone stock sale came under scrutiny in early June, shrinking Martha Stewart Living's market value by $126 million, based on the number of shares outstanding on April 23.
"The firm is suffering with her tarnished image," said Morningstar analyst George Nichols, who follows media companies and doesn't own Martha Stewart stock.
The House panel has been investigating whether investors were misled about the drug's prospects. Former ImClone CEO Samuel Waksal, who counted Stewart as a friend, was charged June 12 with alerting relatives to the U.S. Food and Drug Administration's Erbitux decision, allowing them to bail out before ImClone shares dropped.
Stewart, chief executive officer of her company, sold 3,928 ImClone shares on Dec. 27, after trying to call Waksal that day, House documents showed. She hasn't been charged with insider trading, nor has she been named as a target of an SEC or U.S. attorney's probe.
