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Congress expands ImClone probe
House panel probing Stewart's trades expanding investigation to look at other ImClone top execs.
July 23, 2002: 9:02 PM EDT

NEW YORK (CNN/Money) - A Congressional panel investigating the sale of ImClone Systems Inc. stock by company executives late last year called on Merrill Lynch to turn over more records Tuesday.

The House Energy and Commerce Committee, headed by Rep. Billy Tauzin (R-La.), said Tuesday that records indicate that Merrill brokers, or their assistants, at the company's Roseland, N.J. office facilitated sales of ImClone stock by company executives last December.

The records also show "multiple contacts" between ImClone and Merrill's Roseland office during the weeks before regulators rejected an application for ImClone's cancer drug. Congressional investigators want the names of all brokers, their assistants and their clients from Dec. 3 through Dec. 28, 2001. The House panel, which set an Aug. 6 deadline, also wants any data detailing trades of ImClone (IMCL: Research, Estimates) stock during that time period.

"We fully cooperated and will continue to provide any information as requested," a Merrill spokesman said.

The request may indicate that investigators are looking at six ImClone executives, in addition to former CEO Sam Waksal, who sold stock after the company learned the FDA was considering refusing to review the company's Erbitux application.

Some of the sellers include the biotech firm's head lawyer, John Landes, who dropped $2.5 million in stock. Landes's sale was through Merrill Lynch's Roseland office as were the accounts of other ImClone executives, a person familiar with the situation told CNN/Money.

Time magazine earlier this month first reported news of ImClone stock sales by executives other than Waksal.

Martha being probed

The House committee is also probing whether homemaking diva Martha Stewart had inside information when she sold her nearly 4,000 shares a day before the Food and Drug Administration rejected ImClone's cancer application on Dec. 28. Stewart has repeatedly defended herself, saying she had an existing verbal agreement with Peter Bacanovic, a Merrill (MER: Research, Estimates) stock broker, to sell her ImClone shares if the price dipped below $60. Congressional investigators have been unable to find evidence of such an agreement. The homemaking guru is head of Martha Stewart Living Omnimedia Inc. (MSO: Research, Estimates)

Bacanovic and his assistant, Douglas Faneuil, were placed on paid leave last month. Bacanovic is the broker for ex-ImClone CEO Waksal and his daughter Aliza, as well as Stewart.

Waksal is holding plea negotiations with federal prosecutors, and may plead guilty to insider trading-related charges to protect others in his family from being indicted in the case, a person familiar with the situation has told CNN/Money. Waksal's father, Jack, and daughter, Aliza, sold ImClone shares and could face charges, press reports have said.

Investigators have received Bacanovic's personal phone and cell phone records for the month of December. Merrill has previously supplied records to investigators.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.