Martha Stewart was indicted for allegedly selling ImClone stock after hearing that Samuel Waksal, the Chief Executive Officer of ImClone and a friend of StewartÆs, was trying to sell his shares (Cedarbaum, 2003). Waksal was also a friend of Peter Bacanovic, who was StewartÆs stockbroker at Merrill Lynch. The stock is traded on the NASDAQ National Market System administered by the national Association of Securities Dealers, Inc. Stewart sold 3,928 shares of stock in ImClone Systems, Inc., a biological medicines development company, on December 27, 2001, and the following day, the company announced that the Food and Drug Administration had rejected an application by the company for approval of their new cancer fighting drug, Erbitux, which had previously been the companyÆs leading product. After the announcement, the price of the stock fell.
In the beginning of 2001, several government agencies, which included the Securities and Exchange Commission (SEC), the FBI, the United States AttorneyÆs Office for the Southern District of New York (USAO), and a congressional subcommittee initiated an investigation of StewartÆs sale of her ImClone stock on December 27 (Cedarbaum, 2003). The investigation came to the attention of the media, who began issuing reports on the matter, and Stewart made public statements denying any wrongdoing and giving her recollections the facts surrounding the sale of the stock.
On June 23, 2002, Stewart sent an email to Andrew J. Nussbaum, an attorney at Wachtell, Lipton, Rosen and Katz, who were at that time representing her in dealings with the government, giving an account of the ImClone stock sale (Cedarbaum, 2003). The next day Stewart forwarded a copy of this email to her daughter, Alexis Stewart. On August 12, 2002, the grand jury investigating the case issued a subpoena to Martha Stewart Living Omnimedia (MSLO) seeking documents relating to the sale of ImClone stock and all desktop and...