Congressional investigators into the ImClone insider trading scandal say Martha Stewart’s reluctance to let the committee interview her is not a good thing. On Thursday, a day after former ImClone chief Sam Waksal was indicted, the committee said it might subpoena Stewart’s testimony, the New York Times reports.
At issue is Stewart’s sale of nearly 4,000 shares of ImClone last December, the day before the stock tanked on news that the company’s new drug would not receive federal approval. Stewart, who is a friend of Waksal’s, has said she gave her broker, Peter Bacanovic, a standing order to sell the stock if the price fell below $60. According to the Times, however, Bacanovic’s assistant, Douglas Faneuil, has told prosecutors that Bacanovic ordered the sale based on inside knowledge from Waksal, and that Bacanovic also asked him to tell prosecutors of the standing order to sell the shares, an order which Faneuil now says did not exist, and of which no records have been found. (Bacanovic and Fanueil have not commented on the Times report.) Meanwhile, on Wednesday, Waksal was indicted on charges of insider trading, bank fraud, forging a signature, and destroying records to obstruct a federal investigation.
Rep. W.J. ”Billy” Tauzin (R-La.), who chairs the House committee investigating Stewart’s trade, sent her lawyers a letter this week, noting that the lawyers had rebuffed the committee’s efforts to interview Stewart and asking for more documents, not only her own e-mail messages and phone records, but also documents from Stewart’s own company, Martha Stewart Living Omnimedia. Tauzin set a deadline of Aug. 20 for the documents. As far as Stewart’s testimony, a committee spokesman told the Times, ”Certainly we are considering the possibility of subpoenaing Ms. Stewart to appear before our committee, but chairman Tauzin has not made a final decision.” Her lawyers are still discussing the possibility of her talking to the committee after Congress’ August recess, the Times reports.
Stewart, who is also under investigation by the Justice Department and the Securities and Exchange Commission, has yet to be charged with a crime. Still, the scandal has damaged her profile and her business. It’s kept her off her regular appearances on CBS’ ”Early Show,” and it’s been blamed for depressing the stock price of her company by nearly 60 percent since the insider-trading allegations were first revealed on June 12.