Martha's Broker Under Microscope

Congress Subpoenas Broker's Cell Phone Records

(CBS)  The congressional committee investigating the ImClone insider trading scandal tightened the noose around Martha Stewart's broker, issuing a subpoena for his personal cell phone records for all of December.

The broker, Peter Bacanovic, who worked at Merrill Lynch & Co. and orchestrated Stewart's highly scrutinized sale of ImClone Systems Inc. shares, was placed on paid leave late last month, along with his assistant Douglas Faneuil.

The brokerage house's action came after an investigation revealed discrepancies in statements of the two employees. Faneuil is currently being interviewed by the Justice Department, a source familiar with the case told The Associated Press.

A spokesman for the House Energy and Commerce Committee, Ken Johnson, said that "(Bacanovic) had every opportunity to provide these records voluntarily, but we continued to get the run-around. He now has a choice. Turn over the documents or face contempt of Congress charges."

Merrill Lynch turned over documents, including records of a series of e-mails between Faneuil and Bacanovic on Dec. 27, the day that Stewart sold nearly 4,000 shares of ImClone stock.

The next day, the Food and Drug Administration officially announced that it would not review the biotech company's application for the cancer drug Erbitux. ImClone's stock plummeted.

Federal prosecutors and Congress subsequently launched insider trading investigations.

Stewart has repeatedly denied any wrongdoing but has declined to discuss the stock transaction, citing the ongoing investigations. Last week, the
domestic diva bowed out of her weekly segment on The Early Show because CBS News planned to again question her about her sale of ImClone stock.

Many public relations experts have said Stewart has done a poor job of presenting her case to the public. Exhibit A was the domestic diva's appearance on The Early Show two weeks ago.

Stewart fielded questions about her stock sale from Early Show anchor Jane Clayson on a kitchen set. She chopped cabbage with a large knife while Clayson attempted to get her to talk about the transaction. The result was not only comic, but tended to associate the insider trading scandal with her home-and-hearth activities.