artha Stewart turned to her stockbroker at Merrill Lynch, Peter E. Bacanovic, to handle more than $10 million worth of shares offered to friends and associates when her company went public in 1999, Wall Street officials said yesterday, highlighting their longstanding close personal and business relationship.
Late yesterday, Ms. Stewart abruptly canceled her regular appearance for today on the CBS "Early Show" after the network said it would require her to answer more questions on the air about the government investigations into her sale last December of shares of ImClone Systems. Until now she had never missed the show, which started in 1997, for any reason other than illness.
Ms. Stewart's decision to cancel her appearance demonstrated the pressure she faces as three investigations unfold while she continues to deal with the demands of running a $296 million media empire.
Ms. Stewart, the chairman and chief executive of Martha Stewart Living Omnimedia, has said that she and Mr. Bacanovic made an agreement weeks before the sale to sell the shares in Imclone if the price slipped below $60 a share.
Mr. Bacanovic, who joined Merrill in 1993, also handled trading in the shares of Ms. Stewart's company that she made available to her friends at the offering price of $18 a share. That trading would have enabled him to collect commissions both when they were bought and sold. Trading was exceptionally heavy in the early days, with volume reaching 15 million shares when just 8 million had been issued. Mr. Bacanovic was in charge of stock options issued to executives and other employees, too, several former employees said. "He was the point person on the options," one said.
Morgan Stanley, not Merrill Lynch, was the lead underwriter on the Martha Stewart public offering. While the lead underwriter normally is in charge of the so-called friends- and-family shares, one expert in securities law said it was not unusual for a broker to be designated to handle them for employees and other associates at a small company like Ms. Stewart's.
"She may have been trying to do something helpful for him," said the lawyer, Jonathan Feld, a partner at Katten Muchin Zavis Rosenman in Chicago.
The stock rose as high as $49.50 in its first day of trading. It closed that day at $35.56 and rose above $39 a share in each of the next two days. Not all those who received the initial shares sold them immediately.
Merrill would have kept as much as 70 percent of the commissions Mr. Bacanovic generated in those trades.
Merrill suspended Mr. Bacanovic with pay last month along with his assistant, Douglas Faneuil, after an internal investigation turned up what Merrill called "factual issues involving a client transaction." A person close to that investigation has said that the transaction was Ms. Stewart's ImClone sale, and Congressional investigators have said they have not found proof of any formal agreement for the sale in the hundreds of documents turned over to them by Merrill.
A printout turned over to investigators dated Dec. 20, 2001, lists Ms. Stewart's holdings with Merrill and has "$60" handwritten alongside it. But at least one lawmaker said the document did not provide any solid evidence of an agreement to sell the shares.
"We have no way of knowing when that was written on there," said the lawmaker, Representative James C. Greenwood, a Republican from Pennsylvania who is chairman of the House subcommittee looking into the ImClone sales, "whether it was on Dec. 20 or whether it was written there much later."
Mr. Bacanovic's lawyer, Richard Strassberg, would not comment.
Ms. Stewart's disposal of nearly 4,000 shares of ImClone a day before the news about the Food and Drug Administration's rejection of the company's promising cancer drug was announced has come under scrutiny from the Securities and Exchange Commission, the Justice Department and the Congressional committee.
Ms. Stewart last appeared on "The Early Show" a week ago yesterday, though her usual slot is Wednesday. As a condition of permitting her to go on the air then, CBS news executives said she would have to be interviewed by one of the show's co-hosts about the investigation.
Ms. Stewart complied, but it was clear from her demeanor that she resented the questions put to her by the co-host, Jane Clayson. "I just want to focus on my salad," she said, chopping a cabbage into pieces with a large knife as the interview concluded.
The appearance scheduled for this morning, in which Ms. Stewart was to have demonstrated how to prepare icebox desserts, seemed set to go forward in the middle of the afternoon yesterday. But at about 4:30 p.m., a spokesman for Ms. Stewart informed CBS that she would not appear after all.
"She wasn't going to come on without us asking a question," one network executive said. After discussions that people at CBS called amicable, Ms. Stewart apparently concluded that she could not do that.
"As she explained in her previous interview on CBS last week," a spokeswoman for Ms. Stewart said in a statement, "she is unable to comment or offer any other information at this time out of respect for the investigatory process.
"This inherent conflict," the spokeswoman said, "unfortunately prevents Martha from appearing tomorrow."
In a separate statement last night, Sharon L. Patrick, the president of Martha Stewart Living Omnimedia, acknowledged that "the firestorm of media around this matter has placed unexpected and unusual business demands on our company."
She added: "While it is too early to determine what, if any, long-term impact will result from this matter," the company intends to protect its brands and relationships with customers and business partners.
Ms. Stewart's company has lost 34 percent of its value in the stock market since she became embroiled in the investigations early last month. Yesterday its shares closed at $12.60, up $1.10.
Among the friends and associates who bought shares when her company began trading publicly in 1999 was Charles Simonyi, a Microsoft executive, who said yesterday that he and Ms. Stewart were "very good friends." He said he bought more than 10,000 shares in the offering and obtained more later.
Mr. Simonyi said he had asked Ms. Stewart how she was dealing with the controversy, but said he would not betray her confidence by describing her reply.
"I think the controversy is unjust and unfair," he said.