Martha Stewart Trial
Martha Stewart went on trial on January 12, 2004 for conspiracy, obstruction of justice, securities fraud and making false statements in the stock trading scandal at ImClone Systems. Stewart’s sale of almost 4,000 shares of stock in ImClone Systems created suspicions of insider trading. After investigating the matter, the federal prosecutors suspected that she deliberately tried to mislead their investigation. It is considered a Federal felony for someone to falsify or cover a material fact and to knowingly make any materially false statement. The trial was to determine whether Martha Stewart was a criminal who lied to the government about selling stock based on an inside tip or just an investor who saved money with a smart bet on the market.
The Securities and Exchange Commission noticed an unusual coincidence between selling a large number of shares by the CEO of ImClone and Martha Stewart and began an investigation to determine if Martha Stewart was guilty of insider trading. Sam Waskal later confirmed that the sale of his shares was due to an advance word that the FDA rejected the application for the approval of the cancer drug.(CNNMoney, 2004)
The government said that Stewart saved about $45000 by selling stock in ImClone on December 27th, 2001. She said she sold the stock because she and Bacanovic, her Merrill Lynch & Co. broker, had a pre-existing agreement to sell when the stock fell to $60.(Answers.com)
During the trial, Douglas Faneuil, Stewart 's broker 's assistant, testified that he tipped Stewart --on orders from his boss, Peter Bacanovic-- about Waksal 's sale of ImClone shares. Faneuil 's testimony was important to the government’s contention that Stewart sold the ImClone shares after she received news from ImClone CEO Sam Waksal and she did not have an agreement with Bacanovic to sell the stock when it fell to $60 a share. In her defense, Stewart 's attorney told the judge that Faneuil at various times had been advised to tell the truth to
The Securities and Exchange Commission noticed an unusual coincidence between selling a large number of shares by the CEO of ImClone and Martha Stewart and began an investigation to determine if Martha Stewart was guilty of insider trading. Sam Waskal later confirmed that the sale of his shares was due to an advance word that the FDA rejected the application for the approval of the cancer drug.(CNNMoney, 2004)
The government said that Stewart saved about $45000 by selling stock in ImClone on December 27th, 2001. She said she sold the stock because she and Bacanovic, her Merrill Lynch & Co. broker, had a pre-existing agreement to sell when the stock fell to $60.(Answers.com)
During the trial, Douglas Faneuil, Stewart 's broker 's assistant, testified that he tipped Stewart --on orders from his boss, Peter Bacanovic-- about Waksal 's sale of ImClone shares. Faneuil 's testimony was important to the government’s contention that Stewart sold the ImClone shares after she received news from ImClone CEO Sam Waksal and she did not have an agreement with Bacanovic to sell the stock when it fell to $60 a share. In her defense, Stewart 's attorney told the judge that Faneuil at various times had been advised to tell the truth to
References: Chernoff, Allan. (2004). Closing arguments underway. Retrieved June 11, 2010, from http://money.cnn.com/2004/03/01/news/companies/martha/index.htm?cnn=yes Key prosecution witness to take stand at Martha Stewart trial (2004).Retrieved June 11, 2010 from http://edition.cnn.com/2004/LAW/01/29/martha.stewart/index.html Sellers, Patricia (November 14, 2005). "Remodeling Martha". Fortune, pp. 49–62. Retrieved June 11, 2010 from http://www.answers.com/topic/martha-stewart