Don't Forget the Basics: A Martha Stewart Timeline

The year: 2001. The date: Dec. 27. The sale: 3,928 shares of ImClone stock at a market price of $58.43.

The fallout from this event culminated for media entrepreneur Martha Stewart on March 5, 2004, when she was convicted of conspiracy, obstruction of justice, making false statements and providing false documents. Stewart, who plans to appeal the verdict, could face up to 20 years in prison. One week earlier, the judge threw out the most serious charge levied against Stewart -- securities fraud.

But back to where it all began. Stewart's unloading of ImClone on Dec. 26, 2001, (a day before the Food and Drug Administration rejected ImClone's important cancer drug Erbitux) has generated a media firestorm that has continued for more than two years. The federal government would later contend that Stewart was tipped after ImClone founder Sam Waksal caught word of the FDA's decision the previous day.

In February 2002, Stewart defended the sale of ImClone to the Securities and Exchange Commission, FBI and federal prosecutors. Stewart informed the various agencies that pursuant to an agreement she had with her broker, Peter Bacanovic, the stock would be dropped if it fell below $60 in value. In doing so, she corroborated the same story Bacanovic had provided to SEC officials a month earlier.

Following suspicions that Waksal had been tipped on Dec. 26, 2001, the ImClone founder was arrested and charged with insider trading in June 2002. In October 2002, Waksal admitted to tipping his daughter to sell her ImClone shares and attempting to sell his own shares.

That same month, Merrill Lynch assistant broker Doug Faneuil pleaded guilty to receiving payment in exchange for promising secrecy about the Stewart sale.

This past June 4, Stewart and Bacanovic were indicted and pleaded innocent to all charges. Stewart was charged with obstruction of justice, providing false statements, securities fraud and conspiracy. Bacanovic was accused of perjury, obstruction of justice, providing false statements, conspiracy and using false documents.

Stewart resigned as chairwoman and CEO of Martha Stewart Living but retained her position as its chief creative officer. Six days later, Waksal was sentenced to seven years in prison for his insider trading violation.

Last November, a U.S. district judge refused Stewart's request to dismiss two of the charges she faced. Stewart's trial got underway on Jan. 27.

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Copyright © 2009 Donald W. Reynolds National Center for Business Journalism