Return to Transcripts main page
Live From...
SEC Files Civil Charges Against Martha Stewart
Aired June 04, 2003 - 13:23 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, ANCHOR: All right, continuing our coverage of Martha Stewart's mess and it certainly is exploding into a bigger story today.
As we speak, Martha Stewart is in a federal courthouse. Through the whole process of receiving an indictment, multiple charges against her, obstruction of justice, and securities fraud, we have -- are just learning of additional civil charges that may be filed by the Securities and Exchange Commission.
For more on that, we go to CNN's Allan Chernoff, who's in front of that courthouse.
Allan, busy day.
ALLAN CHERNOFF, CNN CORRESPONDENT: Yes, absolutely, Miles. And we have been anticipating that the SEC would, in fact, file civil charges. That is also happening right now. And they are filing a securities fraud charge against Martha Stewart. We don't have all the details just yet.
But this would include a demand that Martha Stewart be barred from serving as an officer of a public company. So, clearly, a major threat to her continuing to serve as the chief executive officer of Martha Stewart Living Omnimedia.
Let's get to some detail now of the criminal charges against Martha Stewart. And the story here is that it is all about a cover- up, a cover-up to basically conceal exactly what was behind her sale of nearly 4,000 shares of ImClone stock.
Martha Stewart being charged with obstruction of justice, with false statements, and also with securities fraud by the U.S. attorney's office here in Manhattan.
Included within these charges, they are essentially saying that Martha Stewart lied about a story that she had made an arrangement with her stockbroker to sell ImClone stock if the price fell below $60 a share.
Also, the charges state that Martha Stewart had temporarily changed the computer phone log of a message, stating that she had gotten a call from Peter Bacanovic and she changed the nature of that message. Originally, the message on the computer log kept by her assistant had said, "Peter Bacanovic, her broker, thinks ImClone is going to start trading downward." According to the indictment, Martha Stewart changed that to say, "P.B.," meaning Peter Bacanovic, "reference to ImClone." That apparently was a temporary change in that message.
And the securities fraud charge deals, actually, with her trying to prevent the stock of her own company, Martha Stewart Living Omnimedia, from falling, and trying to prevent that from happening by telling lies about her sale of ImClone stock.
And we should note, yesterday, Martha Stewart's attorney said that she would be pleading innocent to criminal charges, and that she would plan to go to trial -- Miles.
O'BRIEN: Allan, these SEC charges, are they completely independent of the indictment you've been telling us about, sort of on a separate track, or are they linked in some way?
CHERNOFF: Right. Well, it's all linked to the actual sale of the ImClone stock. But this has been a somewhat separate situation. The SEC apparently had wrapped up its investigation quite some time ago.
Now, again, I said we don't have all the detail on the SEC charge. I have not been able to read it just yet. But from what we've heard thus far and what Reuters is actually reporting, it would seem that it deals more directly with the sale of ImClone stock and not as much with the cover-up.
If so, that actually might be a little more difficult to prove, because that is more gray, a murkier area, the actual insider trading. But we'll have to get the actual SEC documents, and then we'll get back to you on it.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired June 4, 2003 - 13:23 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, ANCHOR: All right, continuing our coverage of Martha Stewart's mess and it certainly is exploding into a bigger story today.
As we speak, Martha Stewart is in a federal courthouse. Through the whole process of receiving an indictment, multiple charges against her, obstruction of justice, and securities fraud, we have -- are just learning of additional civil charges that may be filed by the Securities and Exchange Commission.
For more on that, we go to CNN's Allan Chernoff, who's in front of that courthouse.
Allan, busy day.
ALLAN CHERNOFF, CNN CORRESPONDENT: Yes, absolutely, Miles. And we have been anticipating that the SEC would, in fact, file civil charges. That is also happening right now. And they are filing a securities fraud charge against Martha Stewart. We don't have all the details just yet.
But this would include a demand that Martha Stewart be barred from serving as an officer of a public company. So, clearly, a major threat to her continuing to serve as the chief executive officer of Martha Stewart Living Omnimedia.
Let's get to some detail now of the criminal charges against Martha Stewart. And the story here is that it is all about a cover- up, a cover-up to basically conceal exactly what was behind her sale of nearly 4,000 shares of ImClone stock.
Martha Stewart being charged with obstruction of justice, with false statements, and also with securities fraud by the U.S. attorney's office here in Manhattan.
Included within these charges, they are essentially saying that Martha Stewart lied about a story that she had made an arrangement with her stockbroker to sell ImClone stock if the price fell below $60 a share.
Also, the charges state that Martha Stewart had temporarily changed the computer phone log of a message, stating that she had gotten a call from Peter Bacanovic and she changed the nature of that message. Originally, the message on the computer log kept by her assistant had said, "Peter Bacanovic, her broker, thinks ImClone is going to start trading downward." According to the indictment, Martha Stewart changed that to say, "P.B.," meaning Peter Bacanovic, "reference to ImClone." That apparently was a temporary change in that message.
And the securities fraud charge deals, actually, with her trying to prevent the stock of her own company, Martha Stewart Living Omnimedia, from falling, and trying to prevent that from happening by telling lies about her sale of ImClone stock.
And we should note, yesterday, Martha Stewart's attorney said that she would be pleading innocent to criminal charges, and that she would plan to go to trial -- Miles.
O'BRIEN: Allan, these SEC charges, are they completely independent of the indictment you've been telling us about, sort of on a separate track, or are they linked in some way?
CHERNOFF: Right. Well, it's all linked to the actual sale of the ImClone stock. But this has been a somewhat separate situation. The SEC apparently had wrapped up its investigation quite some time ago.
Now, again, I said we don't have all the detail on the SEC charge. I have not been able to read it just yet. But from what we've heard thus far and what Reuters is actually reporting, it would seem that it deals more directly with the sale of ImClone stock and not as much with the cover-up.
If so, that actually might be a little more difficult to prove, because that is more gray, a murkier area, the actual insider trading. But we'll have to get the actual SEC documents, and then we'll get back to you on it.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
