Martha Stewart defends stock sale
Thursday, June 20, 2002
NEW YORK -- In her first public appearance since the ImClone insider trading scandal broke, Martha Stewart told Wall Street analysts Wednesday that there was nothing improper about her dumping company stock just before it plunged on bad news from the government.
At the start of an hourlong presentation at an industry conference, Stewart briefly addressed her December sale of nearly 4,000 ImClone shares. The sale came a day before federal regulators said they would not consider the biotech company's new cancer drug, which sent ImClone plummeting.
"I had no insider information," said Stewart, a friend of the company's former chief executive who is now facing insider trading charges. "The sale was based on information available to the public that day.
"These are the essential facts and I'm sure that time will bear them out," she said, adding that she would not comment further on the topic.
Executives of Martha Stewart Living Omnimedia Inc. then announced an upbeat earnings forecast. Shares in the company rose $2, or 14 percent, to $16.40 in afternoon trading on the New York Stock Exchange.
The stock has been pummeled since June 6, when congressional investigators said they were looking into Stewart's sale of ImClone stock.
But an analyst who attended the Mid-Year Media Review said he would not change his "buy" rating on the company because of questions surrounding the stock sale.
"It has been one week of panic, but there is tremendous durability of the brand," said Doug Arthur of Morgan Stanley.
Congressional investigators are trying to determine whether Stewart had prearranged with her broker, Peter Bacanovic at Merrill Lynch, in late November to sell her remaining ImClone shares if they fell below $60, or after Dec. 10, as the Wall Street Journal reported her broker saying.
Also under investigation is whether Stewart received inside information from Sam Waksal, the former ImClone CEO, or anyone else before she sold her stock Dec. 27.
Waksal was arrested last week on charges of insider trading for allegedly trying to sell his stock and tipping off family members after learning of the government's decision against the company's highly touted cancer drug Erbitux.
In a statement Tuesday, Stewart said she had spoken with the Securities and Exchange Commission and the U.S. Attorney's office, and has cooperated with the House committee that is investigating the ImClone case.
Stewart's attorney has provided documents requested by the committee, including a copy of her cell phone records from Dec. 22 through Jan. 6.