Merrill Assistant Broker Pleads GuiltyOct 2, 2002 | CBSMarketWatch.com
A Merrill Lynch assistant broker on Wednesday pleaded guilty to a misdemeanor bribery charge in a move that increases pressure on Martha Stewart and Sam Waksal in the ImClone insider trading scandal.
Douglas Faneuil reportedly admitted to receiving money or other valuables "as consideration for not informing" others about inside information allegedly given to Stewart about biotech company ImClone.
Faneuil is cooperating with prosecutors in the investigation of firm ImClonen stock sales last December, just before the biotech firm saw its shares crater on a decision by the Food and Drug Administration not to approve the key cancer drug, Erbitux.
A spokesman from Merrill confirmed that the brokerage fired Faneuil after he pleaded guilty to a misdemeanor.
The company also said it has dismissed broker Peter Bacanovic "who declined to cooperate" with investigators, a Merrill spokesman said. The spokesman declined to comment further.
Waksal, the former CEO of the biotech firm, is facing insider-trading charges. Authorities have been eyeing the role of Bacanovic and Stewart in stock sales at that time.
The misdemeanor charge carries a maximum penalty of a year in prison, but under a plea deal, Faneuil will likely get probation.
Faneuil's cooperation is expected to increase the pressure on Bacanovic to tell everything he knows about any insider information that spurred sudden stock sales by members of Waksal's family and others, including Stewart, the Associated Press reported.
Merrill Lynch handled Stewart's sale of nearly 4,000 ImClone shares last December.
Faneuil reportedly had accepted Knicks tickets in exchange for hiding his knowledge, but his lawyer denied that. He received an extra week of vacation and a free airline ticket, according to court papers.
Stewart has repeatedly denied any wrongdoing. The domestic diva maintained that she had a standing order with Bacanovic to sell the ImClone shares if they fell below $60.
Faneuil initially backed up her account, but later changed his story and said there had been no such order.
Prosecutors allege that the tip for Stewart to sell her stock came from Bacanovic, either directly or indirectly. Stewart spoke by phone with Faneuil the day her sale was made, investigators say.
Waksal was indicted in August for allegedly tipping off family members to dump millions of dollars worth of ImClone stock before the bad news about Erbitux hit the markets. He has pleaded innocent to the charges.