Stewart's version of sale, ex-broker's differ


NEW YORK - Martha Stewart and her former broker gave different versions in 2002 to investigators examining the events surrounding her sale of ImClone Systems Inc. stock.

The Securities and Exchange Commission and the FBI questioned them as part of an investigation into any ImClone stock sales that occurred a day before an announcement that sent ImClone's stock price plummeting.

Yesterday, the Stewart jury heard different versions of what happened that day. One was a taped interview her co-defendant, former Merrill Lynch broker Peter E. Bacanovic, gave Security and Exchange Commission lawyers Feb. 13, 2002. The other was the one Stewart gave to the FBI agent who helped interview her Feb. 4, 2002, and April 10, 2002.

Agent took notes

Neither of Stewart's interviews was recorded. Instead, Catherine Farmer, the FBI special agent assigned to the case, relied on notes she took in longhand.

Bacanovic, who is accused of lying in his interview and is charged with perjury, was put under oath when questioned about his recollection of the events surrounding Stewart's ImClone sale.

Officials testified yesterday that Stewart, who is charged with lying to investigators during her interviews, was not questioned under oath or advised that she could be prosecuted for answering untruthfully.

Bacanovic's assistant, Douglas Faneuil, has testified that on Dec. 27, 2001, his boss ordered him to tell Stewart that ImClone founder Samuel D. Waksal and his daughters were trying to sell their ImClone holdings at Merrill Lynch & Co. Inc.

Stewart and Bacanovic are also charged with conspiring to concoct a story in which they claimed Stewart sold her stock because they had a pre-existing agreement to dump ImClone if the price dropped to $60 a share.

In an hourlong tape played for the jury, Bacanovic told the SEC that about Dec. 20, 2001, he had a discussion with Stewart during which she agreed to sell her ImClone stock if the price fell to $60.

'Better find Martha'

"At that point, we determined that $60 a share would be a suitable share price, should it ever fall that low," Bacanovic said. "Of course, she never thought it would."

Asked about the events of Dec. 27, 2001, Bacanovic, who was on vacation the day of the sale, said Faneuil, his assistant, called and informed him that the Waksals were selling their ImClone stock.

"All of a sudden, ImClone was on my mind again. ... I thought, 'Oh' I just better find Martha now, I just had this conversation with her a week ago, and here we are.' ... I thought, 'I just had this conversation. This is someone who gets irascible.' And I thought, 'So much for the vacation. Let's try and track down Martha.'"

Bacanovic said Faneuil spoke to Stewart and conducted the trade. "We did the trade," he said, "And then she called me back the next day.

"I did not speak with her that day," Bacanovic said.

Farmer, who took 25 pages of handwritten notes during her interviews with Stewart, said Stewart also said she had a prior agreement with Bacanovic to sell her ImClone shares if the price dropped.

Disagreement on date

Stewart, Farmer said, placed that meeting much earlier, in the fall of 2001.

Asked about the events of Dec. 27, 2001, Stewart said she received a message from her assistant telling her that Bacanovic wanted to speak to her. She reached him at work, she said.

"Ms. Stewart stated that she spoke to Peter Bacanovic; he was in the office that day," Farmer recalled without referring to any notes during her testimony yesterday.

"He told her ImClone was trading below $60, and she said, sell her shares and put in an order," Farmer said.

Stewart and Bacanovic also disagreed about what they discussed concerning ImClone in the weeks after her stock sale.

Stewart told investigators that she and Bacanovic had not discussed Waksal. Bacanovic, however, told the SEC that he had discussed Waksal and his company.

But Bacanovic said he did not order Faneuil to tell Stewart about the Waksals' efforts to sell their shares.

"I do not discuss other clients' affairs with other clients," he said.

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