Merrill Lynch has suspended the broker who handled a trade for Martha Stewart in the shares of ImClone Systems Inc., a troubled biotech company whose former CEO has been arrested on securities fraud charges.

In a statement released late Friday, Merrill Lynch said it had put Peter Bacanovic, as well as his assistant, Douglas Faneuil, on paid leave following an internal investigation. Merrill Lynch said it has turned over information to the relevant authorities, but declined to comment further.

Bacanovic is the broker for ImClone co-founder and former CEO Sam Waksal and his daughter Aliza, as well as Stewart. Waksal was charged June 12 with insider trading.

``It's my understanding that Merrill Lynch uncovered some discrepancies in the statements of these two employees as they prepared to meet with our investigators next week,'' said Ken Johnson, a spokesman for the House Energy and Commerce Committee, which is investigating the ImClone case.

``This action only confirms our suspicions that we are on the right track and getting very close to the truth,'' he added.

The committee asked Merrill Lynch in a letter Friday for several documents related to the sale of ImClone stock by the firm's clients.

The documents sought by the panel include trading records for all Merrill brokers for ImClone stock from Dec. 3-28, as well as telephone records and client records of Bacanovic. The House investigators also are seeking the names of Merrill Lynch employees who assisted Bacanovic in trades of ImClone stock.

Johnson said Stewart was not the focus of the investigation, ``but we continue to pursue leads relating to public statements she has made.''

Stewart has come under scrutiny from both congressional investigators and federal prosecutors over the sale of nearly 4,000 shares of ImClone on Dec. 27, a day before federal regulators said they would not consider the company's new cancer drug. ImClone's shares plummeted after the news came out.

Stewart has said that her trade was perfectly legal and based on information available to the public at the time. A spokeswoman for Stewart did not immediately return a phone call seeking comment on the suspension of the broker.

Waksal, a friend of Stewart who once dated her daughter, allegedly tipped off two people to sell ImClone stock before the drug application was thrown out.

Bacanovic is reported to have said that he and Stewart decided after Dec. 10 — not late November as Stewart told congressional investigators — to sell shares of ImClone if the price fell below $60 a share.

The timing of the discussion is crucial in determining whether Stewart had nonpublic information regarding ImClone. By early December, some of the top officials at ImClone knew that things were not looking good for the application approval for the promising drug.