Martha Stewart

ImClone scandal

Federal indictments and trial

In 2002, Stewart was under investigation for alleged insider trading for selling 3,928 shares of ImClone Systems on December 27, 2001 — an allegation that has never been substantiated nor prosecuted in a court of law. On December 28, the Food and Drug Administration announced it would not review ImClone’s application for Erbitux, which the company touted as a promising cancer drug. ImClone’s stock plunged over 70% in the month after the news came out. Stewart has been a friend of ImClone founder Samuel Waksal, who has since pleaded guilty to six counts of wrongdoing related to insider trading before the announcement. On June 6, 2002, the U.S. House Energy and Commerce Committee, which was already investigating dubious ImClone trading, announced that it was probing Stewart’s stock sale. On October 3, 2002, Stewart resigned from the board of directors of the New York Stock Exchange. Through all the investigation and allegation, Stewart kept her public persona intact, focusing on her homemaking specialties and downplaying or ignoring the increasing clamor for answers about her role in the scandal. (more…)

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