From mid '02 it looks not unlike EgyptAir 990.
Posted on 10/21/2002, 9:26:30 PM by Brian Mosely
US securities regulators have told Martha Stewart they plan to bring a civil case against the home design guru stemming from their probe of inside trading at ImClone, the biotechnology company.
The Securities and Exchange Commission has informed Ms Stewart's lawyers of the likely charges and asked for their response, according to people familiar with the investigation.
The onus is now on Ms Stewart and her lawyers to convince regulators why they should not bring charges.
The SEC action would represent the first formal charges against Ms Stewart in a scandal that has already tarnished her image and knocked hundreds of millions of dollars from her company's market value. Ms Stewart is the public face of a global home design empire spanning merchandise, magazines and television shows.
The charges could bolster a parallel criminal investigation of Ms Stewart being carried out by the US attorney's office. They may also increase pressure on Ms Stewart to step down from the publishing and home design company she founded.
Authorities have been probing whether Ms Stewart relied on insider information last December when she sold her stake in ImClone for $227,000 the day before the Food and Drug Administration publicly rejected Erbitux, the biotechnology company's promising anti-cancer drug, and sent the shares spiralling.
Sam Waksal, ImClone's founder and Ms Stewart's close friend, pleaded guilty last week to several insider trading charges.
Ms Stewart's spokesperson declined to comment yesterday. Ms Stewart has denied any wrongdoing in the matter, and stated that her decision to sell was based on a pre-arranged agreement with her broker. The SEC declined to comment.
The SEC sent Ms Stewart's lawyers a so-called "Wells" notice detailing the proposed charges just over a week ago. Such notices are meant to give potential targets the opportunity to submit in writing an account of their version of events and circumstances. They usually result in enforcement proceedings.
"The odds are pretty good you are going to be charged," said Ira Sorkin, a lawyer who used to head the SEC's New York office.
The Wells procedure, while formally designed to help people and companies being investigated, is just as helpful for the SEC as the written submission usually gives the agency invaluable information.
The SEC often works in conjunction with criminal investigators when they file such actions. Any material that civil regulators uncover in their investigations can then be passed on to criminal authorities.
Martha Stewart Living Omnimedia said it would not comment on the investigation. The board denied in September that it was searching for a replacement for Ms Stewart, but said they "actively monitor" the business needs of the company with regard to "investigations involving Ms Stewart".
Shares in the company have fallen more than 60 per cent since the scandal erupted in June. Ms Stewart, a former stockbroker, stepped down from the board of the New York Stock Exchange this month.
From mid '02 it looks not unlike EgyptAir 990.
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