Stewart settles civil insider trading charges with SEC

[JURIST] Martha Stewart [JURIST news archive] has reached a settlement agreement [press release] with the US Securities and Exchange Commission [official website] on insider trading civil charges [JURIST report], the SEC announced Monday. Stewart will pay $195,000, which is roughly equivalent to the losses Stewart avoided by selling nearly 4,000 shares of ImClone Systems [corporate website] stock one day before the Food and Drug Administration declined to review ImClone's application for its promising cancer drug Erbitux. Stewart will also be barred from serving as a director of a publicly traded company for five years, including Stewart's own Martha Stewart Living Omnimedia, Inc. [corporate website]. Stewart's broker, Peter Bacanovic, also agreed to pay a penalty of $75,000. The settlement comes after Stewart initially opted to deny the SEC allegations [JURIST report] in May, claiming she acted in good faith when she sold the shares.

The SEC complaint [PDF text] was originally filed [SEC press release] in 2003 when Stewart was indicted in criminal court, but was stayed pending the criminal proceedings. Last September, Stewart recently completed [JURIST report] a five-month prison sentence followed by a five-month house arrest sentence under her 2004 criminal conviction [JURIST report] for lying to federal investigators in connection with her sale of ImClone stock. The US Court of Appeals for the Second Circuit upheld her conviction in January [JURIST report]. If Stewart had not settled the SEC charges and lost the case at trial, she potentially faced penalties up to three times the amount she would have lost on the ImClone stock. AP has more.



 

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