Mr Sam Waksal, the former ImClone chief executive, pleaded guilty yesterday to insider trading charges as government prosecutors indicated they were closing in on other suspects.
But Mr Waksal's plea was not entered as part of an agreement to co-operate with investigators, and does not appear to bring any closer a case against Martha Stewart, the home design icon and Waksal's friend who is under investigation.
Mr Waksal pleaded guilty to some but not all of the charges in an August grand jury indictment, including securities fraud, perjury, and obstruction of justice. He faces more than 10 years in prison.
He admitted in a federal court he ordered his daughter, Aliza, to sell ImClone shares shortly before the biotechnology company announced its cancer drug, Erbitux, had been rejected by the Food and Drug Administration. He also admitted forging the signature of the company's general counsel to cover up a $44 million ($45 million) bank loan he secured using ImClone stock options he had already pledged to another creditor. "I deeply regret what happened. I was wrong," Mr Waksal said outside the courthouse.
Government prosecutors said they might bring more charges against Mr Waksal, and indicated they were widening their net.
Mr Michael Schachter, assistant US attorney. said: "The government has developing compelling evidence that Dr Waksal tipped others." The government was exploring a $600,000 share sale on December 28th by "a close friend" of Mr Waksal and another totalling $30m that began the previous day. Ms Stewart sold 3,928 ImClone shares on December 27th, the day before the FDA ruling, for about $225,000. She has denied any wrongdoing.
Two weeks ago, Mr Doug Faneuil, an assistant stockbroker at Merrill Lynch, pleaded guilty to a misdemeanour charge, and has agreed to help the government with its investigation. Mr Faneuil has contradicted Ms Stewart's claim that she sold shares under an agreement with her broker, Peter Bacanovic, to unload them if they fell below $60.
But lawyers said Mr Waksal's failure to reach a plea agreement suggested he would be of little help in charging Ms Stewart.
US companies lag behind many international counterparts in the amount of information disclosed in annual reports, according to Standard & Poor's. However, corporate America's overall disclosure levels rank highly. A study by the credit rating agency says: "Companies that provide more voluntary disclosure in their annual reports command a higher stock price."- (Financial Times Service)
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