Friday, March 11, 2005

An Afterthought: 'Hey, let's prosecute some illegal insider traders, too'?

New York's federal prosecutors --now that they've succeeded in putting away dangerous sexagenarian home economists who aren't nice to them--get around to people who actually might have broken a law:

Two friends of Samuel D. Waksal, the former chief executive of ImClone Systems, were arrested yesterday and charged with insider trading for selling their shares in ImClone after receiving a tip from Dr. Waksal.

Dr. Zvi Y. Fuks, chairman of the department of radiation oncology at Memorial Sloan-Kettering Cancer Center in New York, and Sabina Ben-Yehuda, who worked at Scientia, an investment company set up by Dr. Waksal, were charged with securities fraud and conspiracy to commit securities fraud in a federal criminal complaint unsealed yesterday in New York.

The complaint contends that they sold their shares in ImClone in December 2001 after Dr. Waksal told them that the government was about to deny approval of the drug Erbitux, news that would cause ImClone shares to plummet when it became public.

After Dr. Waksal was arrested on similar charges in June 2002, he denied passing the information to Ms. Ben-Yehuda and telling her to inform Dr. Fuks. But according to the criminal complaint, Dr. Waksal gave a different version of events when testifying before a grand jury last month.

....Martha Stewart, the founder of Martha Stewart Living Omnimedia, last week ended a five-month prison term for lying to regulators about her sale of ImClone stock and is now under five months of house arrest. She also faces S.E.C. charges.

More than three years later, the S.E.C. has not been able to come up with a case against Martha? Gee, wonder why that is?

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