Jun 20, 2002 By Seth Sutel Ap Business Writer 4 min read

NEW YORK (AP) – Striding into a room full of reporters and analysts Wednesday, Martha Stewart made her first public appearance since the ImClone insider trading scandal made her nearly daily fodder for the tabloids a week ago. Before presenting an update on her company’s performance at a media industry conference, Stewart matter-of-factly restated her contention that there was no wrongdoing in her December sale of nearly 4,000 ImClone shares. The sale took place the day before federal regulators announced they would not even consider the biotech company’s key drug for approval, sending ImClone shares reeling. At the beginning of an hour-long presentation, Stewart said she would briefly remark about something she expected people would be interested in, but would have no more to say on the topic. “I had no insider information. … The sale was based on information available to the public that day. … These are the essential facts and I’m sure that time will bear them out.” Stewart said reports about the sale had generated “misinformation and confusion.”

Shares of her Martha Stewart Living Omnimedia Inc. rose 13 percent Wednesday after executives increased their estimates for the second quarter. The company now expects to earn 15 cents per share, up from an earlier estimate of 14 cents. The shares have been pummeled since congressional investigators said June 6 they were looking into Stewart’s sale of ImClone stock.

A prominent media analyst who attended the Mid-Year Media Review in New York said he would not change his “buy” rating on the company because of questions surrounding the stock sale.

“It has been one week of panic, but there is tremendous durability of the brand,” said Doug Arthur, a media analyst with Morgan Stanley. “This is a very deep bench” he said of the company’s management.

Stewart’s attorney has provided documents requested by the House Energy and Commerce Subcommittee, including a copy of her cell phone records from Dec. 22 through Jan. 6, said committee spokesman Ken Johnson. Stewart’s attorney, James Fitzpatrick, also gave Merrill Lynch permission to provide documentation of her stock sale.

But Johnson said there are unanswered questions as they probe whether she received inside information from Sam Waksal, a personal friend and the former chief executive of ImClone, or anyone else before she sold her stock Dec. 27.

Waksal was arrested last week on charges of insider trading for allegedly trying to sell his stock and tipping off family members after learning of the FDA’s decision.

Congressional investigators are still trying to figure out whether Stewart had prearranged with her broker, Peter Bacanovic, in late November to sell her remaining ImClone shares if they fell below $60, or after December 10, as the Wall Street Journal reported that her broker is saying.

“They’ve answered most questions but not the one troubling us the most,” Johnson said.

The timing of the prearranged sell order is crucial in determining whether Stewart had nonpublic information regarding ImClone.

Rep. Jim Greenwood, R-Pa., chairman of the investigative subcommittee, said that Sam Waksal and his daughter also used Bacanovic as their broker.

Greenwood said that investigators know that Stewart flew from her home in Connecticut around 8:15 am on Dec. 27, landed in San Antonio for refueling, and called her office from there. Her office connected her with Bacanovic. After an 11-minute conversation he sold the shares. Stewart hung up the phone and called Waksal.

They don’t know, for example, if Bacanovic saw that the Waksals were selling shares and tipped off Stewart.

“A prudent person would want to know, ‘What did Bacanovic know and what did he say?” Greenwood asked.

Despite the flurry of media attention surrounding Stewart, analysts said she could emerge unscathed.

“I think consumers leave the headlines at the entrance to the store. The much bigger threat to Martha is when her products are out of stock at Kmart,” said Candace Corlett, a principal at WSL Strategic Retail, a market research firm.

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AP Business Writers Anne D’Innocenzio in New York and Marcy Gordon in Washington contributed to this report.