Newsweek Cover: Martha's Mess

House Committee Spokesman Says Stewart's Broker Will Either 'Blow This Thing

Wide Open' or 'Put It to Bed'

Analyst: If Scandal Means Martha Can't be on TV Anymore,

'Well, That Would be A Crippling Blow'

Jun 23, 2002, 01:00 ET from Newsweek

    NEW YORK, June 23 /PRNewswire/ -- As the scandal heats up and the
 investigation continues about what domesticity priestess Martha Stewart knew
 before she dumped 3,928 shares of ImClone stock before it tanked, a Capitol
 Hill spokesman says it may come down to the testimony of Stewart's broker,
 Peter Bacanovic, to clear her name. "He's the one that's either going to blow
 this thing wide open or put it to bed in terms of Martha Stewart," says Ken
 Johnson, a spokesman for the House Committee in the current Newsweek cover
 story "Martha's Mess" (on newsstands Monday, June 24).
     (Photo: )
     Newsweek goes inside the clubby world of New York's social elite that
 Martha frequented where the rich and powerful pass around insider business
 gossip as readily as the help passes out smoked salmon canapes, writes Senior
 Editor Marc Peyser. "A lot of information is being passed amongst each other
 just for reasons of talking," David Patrick Columbia, editor in chief of, tells Newsweek. "They don't even think of it as
 insider information."
     Bacanovic left Stewart a message about ImClone's stock dropping to below
 $60, the price at which she says they previously agreed to sell. Last week,
 Merrill Lynch suspended Bacanovic. "If Martha Stewart was tipped off, we
 always thought it was from her broker," a Congressional investigator tells
 Newsweek. "If Bacanovic was tipped by Aliza, (daughter of Sam Waksal, ImClone
 CEO and close friend of Stewart) he probably called his A-list clients. That's
 the way this jet-set crowd works."
     But Martha would still have had to know she was acting on insider
 information, and no one has asserted that she did. In the meantime, the stock
 in Stewart's company is down 16 percent since the news broke of her
 involvement with ImClone. "If this turns out to be a temporary problem, the
 stock will weather it," says Laura Richardson, an analyst for Adams, Harkness
 & Hill. "If it means that Martha can't be on TV anymore -- well, that would be
 a crippling blow."
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SOURCE Newsweek