Today was the second day on the witness stand for Douglas Faneuil, who was an assistant to Ms. Stewart’s stockbroker at Merrill Lynch, Peter E. Bacanovic, and was covering for his boss when the shares were sold on Dec. 27, 2001.
On Tuesday, Mr. Faneuil told the jury at the federal courthouse in Lower Manhattan that Mr. Bacanovic had instructed him to tell Ms. Stewart that the chief executive of ImClone, Sam Waksal, was selling his shares in the company.
Mr. Faneuil’s testimony has been highly anticipated in the case being heard before Judge Miriam Goldman Cedarbaum of Federal District Court.
Ms. Stewart sold her 3,928 shares in ImClone Systems just before the company announced that a much-anticipated drug had run into serious regulatory obstacles. Mr. Bacanovic and Ms. Stewart have maintained that she had a standing order to sell her ImClone stock if the price dropped below $60 a share.
Ms. Stewart is not charged with criminal insider trading; she is being tried on charged of lying to investigators about what prompted her to sell her stock. Mr. Bacanovic also faces charges of obstructing justice.
Under questioning by the prosecution today, Mr. Faneuil elaborated on his Tuesday testimony about Dec. 27, 2001, the day Ms. Stewart’s shares were sold. He said that Mr. Bacanovic, who was vacationing at the time, had told Mr. Faneuil to “get Martha on the phone” after Mr. Waksal and his family began dumping their shares of the company.
Ms. Stewart could not be reached, Mr. Faneuil testified, so Mr. Bacanovic told him that she would call back and “to tell her what’s going on.”
When Mr. Faneuil asked if he should tell Ms. Stewart about the Waksal transactions, he testified, Mr. Bacanovic replied: “Of course, you must. You’ve got to. That’s the whole point.”
In Tuesday’s testimony, Mr. Faneuil said he had told one client what another client was doing in his account and then had lied to cover it up.