SEC Press press_release 7 KB 4,026 chars

Press Release: Martha Stewart and Peter Bacanovic Settle SEC's Insider Trading Charges; 2006-134; Aug. 7, 2006

Release: 2006-134
Caption: Securities and Exchange Commission v. Five Year Bar From Serving As a Director of a Public Company, et al.

summary

Martha Stewart and her broker Peter Bacanovic settled SEC insider trading charges after Stewart sold ImClone stock based on Bacanovic’s tip about CEO Samuel Waksal’s impending sale, avoiding $45,673 in losses before a 16% stock drop, and both agreed to monetary penalties totaling $270,000 plus professional bans without admitting guilt.

paragraph

Martha Stewart avoided $45,673 in losses by selling ImClone Systems stock in December 2001 after her broker, Peter Bacanovic, tipped her that CEO Samuel Waksal was liquidating his shares ahead of negative FDA news. Stewart agreed to pay $195,000 in total—$58,062 in disgorgement and interest plus a $137,019 penalty (three times the avoided loss)—and accepted a five-year ban from serving as a public company director or in key financial officer roles. Bacanovic paid $75,645 in disgorgement and penalties, was already barred from associating with broker-dealers, and both consented to permanent injunctions without admitting or denying the allegations.

narrative

In December 2001, Martha Stewart sold all her ImClone Systems stock after her broker, Peter Bacanovic, tipped her that CEO Samuel Waksal and his daughter were selling their shares, based on nonpublic information that the FDA was about to reject ImClone’s cancer drug Erbitux. The next day, ImClone’s stock plummeted 16% after the FDA announcement, allowing Stewart to avoid $45,673 in losses. The SEC charged both with insider trading, alleging violations of federal antifraud securities laws, and in August 2006, they settled without admitting or denying guilt. Stewart agreed to pay $195,000 in total: $58,062 in disgorgement and interest, plus a $137,019 penalty equal to three times the avoided loss, along with a five-year ban from serving as a public company director or in roles involving financial reporting, disclosures, audits, or SEC filings. Bacanovic paid $75,645—$645 in disgorgement of commissions and interest plus a $75,000 penalty—and was already barred from associating with broker-dealers. The SEC, with assistance from the U.S. Attorney’s Office and FBI, sought the settlement to sanction the misconduct and prevent future access to positions of investor trust, securing permanent injunctions against both parties for future securities law violations.

Enriched metadata

Scheme: insider-trading (100%)
Court: Southern District of New York
Outcome: settled
Disgorgement: $45,673
Civil penalty: $195,000
Victim loss: $75,000

Classified insider-trading(confidence 100%). EDGAR detection: forms 4/3/5/144· recall 81% / precision 19%. detection rule →

Extracted insights

Dollar amounts 9

$195K $195,000 $100K–$1M
$137K $137,019 $100K–$1M
$75K $75,000 $10K–$100K
$58K $58,062 $10K–$100K
$46K $45,673 $10K–$100K
$12K $12,389 $10K–$100K
$645 $645 <$10K
$510 $510 <$10K
$135 $135 <$10K

Entities 6

scheme_term $45,673, representing losses avoided from her insider trading
company five year bar from serving as a director of a public company
person mark k. schonfeld
person Martha Stewart
agency sec's complaint
agency sec's insider trading charges

Triples 25

Martha Stewart Settle SEC's Insider Trading Charges
SEC Announce Agreement to settle insider trading charges against Martha Stewart and Peter Bacanovic
Stewart Agree to Injunction, disgorgement of losses she avoided, and the maximum penalty of three times the losses she avoided
Stewart Agree to Five year bar from serving as a director of a public company
Stewart Agree to Five year limitation on the scope of her service as an officer or employee of a public company
Bacanovic Agree to Injunction and to pay disgorgement of commissions and a penalty totaling approximately $75,000
Commission Bar Bacanovic from associating with a broker, dealer or investment adviser
Mark K. Schonfeld Say This settlement achieves everything we sought to accomplish in pursuing this case
SEC's complaint Allege Bacanovic illegally tipped his client, Stewart, with the nonpublic information that the then-CEO of ImClone Systems, Samuel D. Waksal, and his daughter were selling their ImClone stock
Stewart Sell All of her ImClone stock
ImClone Announce That the FDA had refused to file ImClone's license application for a new cancer drug, Erbitux
ImClone's stock price Drop 16%
Complaint Allege Stewart and Bacanovic violated the antifraud provisions of the federal securities laws
Stewart and Bacanovic Agree to Settle the SEC's enforcement action by consenting to final judgments that impose permanent injunctions against future violations of the antifraud provisions of the federal securities laws
Stewart Disgorge $45,673, representing losses avoided from her insider trading
Stewart Pay Prejudgment interest of $12,389
Stewart Pay A maximum civil penalty of $137,019, representing three times the amount of losses avoided
Stewart Be barred from Serving as a director of a public company for five years
Stewart Be limited in Her service as an officer or employee of a public company for five years
Bacanovic Disgorge $510, representing the commissions he earned as a result of Stewart's ImClone stock sale
Bacanovic Pay Prejudgment interest of $135
Bacanovic Pay A civil penalty of $75,000
SEC File The proposed final judgments with the U.S. District Court in Manhattan for consideration and approval
Defendants Consent to The judgments without admitting or denying the allegations in the complaint
Commission Appreciate The assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in the investigation of this matter

View original SEC press releasesec.gov

Extracted body text (4,026c)

Martha Stewart and Peter Bacanovic Settle SEC's Insider Trading Charges FOR IMMEDIATE RELEASE 2006-134 Washington, D.C., Aug. 7, 2006 - The Securities and Exchange Commission today announced that it has reached an agreement to settle insider trading charges against Martha Stewart and Peter Bacanovic relating to Stewart's sale of ImClone Systems stock in December 2001. Under the settlement, Stewart agrees to an injunction, disgorgement of losses she avoided, and the maximum penalty of three times the losses she avoided, for a total of about $195,000 in monetary relief. Stewart also agrees to a five year bar from serving as a director of a public company and a five year limitation on the scope of her service as an officer or employee of a public company. Bacanovic agrees to an injunction and to pay disgorgement of commissions and a penalty totaling approximately $75,000. In a separate order, the Commission previously barred Bacanovic from associating with a broker, dealer or investment adviser. Mark K. Schonfeld, Director of the Commission's Northeast Regional Office, said, "This settlement achieves everything we sought to accomplish in pursuing this case. The combination of monetary relief and future professional restrictions serve both to sanction the defendants' insider trading and to restrict them from future positions of investor trust." The SEC's complaint, filed in June 2003, alleges that on Dec. 27, 2001, Bacanovic, then a broker, illegally tipped his client, Stewart, with the nonpublic information that the then-CEO of ImClone Systems, Samuel D. Waksal, and his daughter were selling their ImClone stock. Based on this information, Stewart sold all of her ImClone stock. The next day, ImClone announced that the FDA had refused to file ImClone's license application for a new cancer drug, Erbitux, and ImClone's stock price dropped 16%. The complaint alleges that Stewart and Bacanovic violated the antifraud provisions of the federal securities laws. Stewart and Bacanovic have agreed to settle the SEC's enforcement action by consenting to final judgments that impose permanent injunctions against future violations of the antifraud provisions of the federal securities laws and imposing the following relief against each defendant: Stewart Disgorgement of $45,673, representing losses avoided from her insider trading, plus prejudgment interest of $12,389, for a total of $58,062; A maximum civil penalty of $137,019, representing three times the amount of losses avoided; A five year bar from serving as a director of a public company; and A five year limitation on her service as an officer or employee of a public company. During that period, she will be prohibited from participating in certain activities, including financial reporting, financial disclosure, internal controls, audits, SEC filings, and monitoring compliance with the federal securities laws. Bacanovic Disgorgement of $510, representing the commissions he earned as a result of Stewart's ImClone stock sale, plus prejudgment interest of $135, for a total of $645; and A civil penalty of $75,000. The SEC is today filing the proposed final judgments with the U.S. District Court in Manhattan for consideration and approval. The defendants consented to the judgments without admitting or denying the allegations in the complaint. The Commission appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in the investigation of this matter. # # # For further information contact: Mark K. Schonfeld (212) 336-1020 Director, Northeast Regional Office Helene T. Glotzer (212) 336-0078 Associate Regional Director, Northeast Regional Office Bruce Karpati (212) 336-0104 Assistant Regional Director, Northeast Regional Office Alexander M. Vasilescu (212) 336-0178 Regional Trial Counsel, Northeast Regional Office Additional materials: Litigation Release 19794 http://www.sec.gov/news/press/2006/2006-134.htm Home | Previous Page Modified: 08/07/2006

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