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Thursday, Aug. 8, 2002

The Wall Street Journal report comes one day after a federal grand jury indicted ImClone founder Samuel Waksal on insider trading charges. Waksal is accused of trying to sell his shares and warning friends and family to sell their ImClone shares before the company's Dec. 28 announcement that the Food and Drug Administration wouldn't review the biotechnology company's cancer drug.

The indictment also includes additional counts of perjury, obstruction of justice and bank fraud. If convicted of bank fraud, Waksal faces a maximum 30-year prison term.

Prosecutors haven't struck a deal with Merrill trading assistant, Douglas Faneuil, the newspaper reported. But if a deal is reached, it could mean legal trouble for Stewart, who sold nearly 4,000 ImClone shares on Dec. 27.

Stewart has said she sold her shares because of previous agreement with her broker and Faneuil's boss, Peter Bacanovic, to sell when the price of ImClone fell below $60 a share.

The Journal reported that federal investigators doubt Stewart's story, because there was no official record at Merrill showing that an agreement existed, just some notes from Bacanovic.

Moreover, prosecutors recently widened their investigation of Stewart beyond insider trading to include possible obstruction of justice and making false statements about why she sold, after hearing Faneuil's account of events, the newspaper said.

Faneuil, 26, has told Merrill executives and federal investigators that Stewart sold her shares after he advised her, at the behest of Bacanovic, to take the action because Waksal and members of his family also were selling their stock, the Journal reported.

Copyright 2002 by United Press International.

All rights reserved.

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