Faneuil, a broker’s assistant at Merrill Lynch was the staffer who spoke to Stewart by telephone that day. He is expected to testify that he was ordered to tell Stewart that ImClone founder Samuel Waksal was dumping his shares in the company.
That testimony would contradict both Stewart and Peter Bacanovic, his former boss and the co-defendant in the highly publicized trial. Both defendants claim Stewart never received a tip, but rather sold the stock because they had reached an agreement months earlier to unload it when it fell to about $60 a share.
Stewart is not charged with insider trading, but Faneuil’s testimony could bolster the government’s allegations she and Bacanovic lied to securities investigators to hide the suspicious stock trade.
But defense lawyers will attack Faneuil’s credibility, saying he is the one who is an admitted liar and who cut a plea deal to save his own skin.
According to the prosecutor’s opening statement on Tuesday, Stewart and Bacanovic were vacationing separately in late December 2001 when Waksal started selling his ImClone shares because he knew the government was about to reject an application for a new cancer-fighting drug.
Waksal’s large sell orders were placed through Faneuil, who was covering for his vacationing boss. Concerned about the size of the trades, Faneuil called Bacanovic and the broker told him to expect a call from Stewart. Faneuil is expected to testify that Bacanovic ordered him to inform her of the Waksal sale.
Prosecutor Karen Patton Seymor said that, when Faneuil questioned whether it was “okay” to do that, Bacanovic answered: “You have to. You must.”
She said Faneuil followed his orders.