Former ImClone CEO Samuel Waksal was sentenced to 87 months in prison and fined $3 million after pleading guilty to six counts, including insider trading and fraud. Waksal sold ImClone stock after finding out regulators had rejected an application for the company’s new cancer drug , Erbitux. (The drug was later approved.)

Style guru and media magnate Martha Stewart was also charged in the case. In 2004 she was convicted of obstruction of justice charges relating to her sale of ImClone stock. She was sentenced to 10 months, split between prison and home confinement, and fined $30,000. Her stock broker, Peter Bacanovic, was also convicted.
That said, Stewart offers the best example of why it’s best not to trade on material insider information – leaving the moral aspect aside. If she had simply held her ImClone stock, it would have hit the $70-$80 range during the Eli Lilly takeover, making her holdings worth around $60,000 more than what she sold out for. Instead, she was fined $30,000 and ended up in jail. The risks, in this case, definitely outweighed the returns.
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