Martha Stewart Denies Insider Trading

Home design and decorating diva Martha Stewart insisted again on Tuesday that inside information played no role in her sale of shares in troubled biotechnology firm ImClone Inc., but said she has talked with federal regulators about the trade.

Stewart, chief executive of Martha Stewart Living Omnimedia Inc., said in a statement that she spoke earlier this year with the U.S. Securities and Exchange Commission and the U.S. Attorney's Office and has cooperated with the House Energy and Commerce Subcommittee, which is investigating the ImClone debacle. 

She described her Dec. 27, 2001, sale of nearly 4,000 shares of ImClone stock as "entirely proper and lawful" and said it was based on information that was available to the public that day. 

The House panel has received a copy of cell phone records showing that Stewart, on her way to Mexico for vacation, made three calls on Dec. 27 as her private jet refueled in San Antonio, said Ken Johnson, a spokesman for House Energy and Commerce Committee Chairman Billy Tauzin, a Louisiana Republican. 

One was a one-minute call to her home answering machine, Johnson said. The second was an 11-minute call to her New York office during which she was connected to her broker, Peter Bacanovic of Merrill Lynch. The third was a two-minute call to ImClone's offices that concluded at 1:43 p.m. Eastern time. 

Timing of Stop-Loss Order Unclear 

The documents "clear up many of our questions, but not the most nagging one. Was Ms. Stewart's pre-existing agreement to sell her stock reached in late November, as she says, or in mid-December, as some published reports have indicated?" Johnson said. 

"That's important for us to find out because clearly by December some officials at ImClone had a pretty good idea that the sky was about to fall," he added. 

Stewart previously has said she did not speak to Sam Waksal, ImClone's former chief executive and her close friend, before selling her ImClone shares. Waksal was arrested last week and charged with illegally acting on inside information to sell ImClone shares and tipping family members off to do the same. 

"The stock price had dropped substantially, to below $60. Since the stock had fallen below $60, I sold my shares, as I had previously agreed to do with my broker," Stewart said. 

Her statement echoes a similar one issued last week in which Stewart said notification from her broker that ImClone's shares — which have a 52-week high of $75.45 — had dropped below $60 prompted her to approve selling the stock. 

ImClone's shares have fallen 80 percent since the U.S. Food and Drug Administration turned away on Dec. 28 an application for its experimental cancer drug, but they were already heading lower by mid-December. 

Stewart has given Merrill Lynch approval to provide the House committee with documentation regarding the Dec. 27 stock sale, Johnson said. Bacanovic's attorneys told the panel they will cooperate with its probe, and investigators expect to interview him next week, Johnson added. 

"Hopefully he can clear up this matter," Johnson said. 

Merrill Lynch spokesman Timothy Cobb said he could not comment on the investigation "except to say that we will cooperate fully." 

Cobb said Bacanovic, who was traveling out of the country, "is an employee held in high regard at the firm." 

Shares of Martha Stewart Living have lost about 21 percent of their value since Stewart's ImClone stock sales were reported on June 6. On Tuesday, the stock fell 63 cents, or more than 4 percent, to close at $14.40 on the New York Stock Exchange. 

ImClone's shares rose $1.40, or more than 14 percent, to close at $11.08 on the Nasdaq exchange.