June 10, 2003 marks the date Samuel Waksal, former CEO of ImClone Systems, was sentenced to 87 months in prison and fined $3 million for his role in one of the most publicized insider trading scandals in history. The prison sentence was the maximum allowed under insider trading laws. In addition, Waksal had to pay a $1.2 million restitution payment to the state of New York.
The Scandal
The securities fraud charges stemmed from the actions Waksal took just days after he learned that ImClone's marquee cancer drug, Erbitux, would be rejected by U.S. regulators. Regulators said Waksal tried to sell 80,000 shares of ImClone in two days for about $5 million but was rejected by two separate brokers.

Stewarts Hand Caught in Cookie Jar
Publicity surrounding the case intensified after it was learned that home-decorating icon Martha Stewart had also used this insider information to sell 4,000 shares of ImClone on Dec 27, 2001 – one day before the FDA rejected the company's cancer drug application.

Stewart completely denied any wrongdoing, saying "In placing my trade, I had no improper information." Unfortunately for Stewart, the jury thought differently and sentenced her to five months in prison. Interestingly, Stewart only saved $51,000 by acting on the insider information. (Read 4 History-Making Wall Street Crooks to learn about Wall Street's most notorious swindlers.)

Related Articles
  1. Professionals

    4 Must Watch Films and Documentaries for Accountants

    Learn how these must-watch movies for accountants teach about the importance of ethics in a world driven by greed and financial power.
  2. Investing Basics

    4 Iconic Financial Companies That No Longer Exist

    Learn how poor management, frauds, scandals or mergers wiped out some of the most recognizable brands in the finance industry in the United States.
  3. Active Trading

    What Is A Pyramid Scheme?

    The FTC announced it had opened an official investigation of Herbalife, which has been accused of running a pyramid scheme. But what exactly does that mean?
  4. Professionals

    7 Careers That No Longer Exist

    Learn how technology and innovation has led to the near-extinction and elimination of seven careers that once employed hundreds of thousands of people.
  5. Investing Basics

    How Financial Statements Are Manipulated

    Financial statement manipulation is an ongoing problem, and investors who buy stocks or bonds should be aware of its signs and implications.
  6. Economics

    Management Strategies From A Top CEO

    Jack Welch is a legend in the business world: during the two decades he was CEO of General Electric, the company’s value rose by 4000%.
  7. Investing News

    Betamax, International Symbol Of Bad Marketing, Is Finally Dead

    Sony Betamax is the business textbook case study of a company's spectacular oversight in assessing consumer demand. Now, Sony is finallly discontinuing it.
  8. Personal Finance

    The Story of Uber: How a Snowy Night in Paris Created a $70 Billion Behemoth

    Uber's journey to become the world's most highly valued private startup.
  9. Economics

    3 Notorious American White Collar Criminals

    Learn about the crimes and punishments of some of the most infamous convicted white-collar crooks.
  10. Savings

    Is It Safe to Send Money Through Gmail?

    Learn why Google's safeguards minimize the risks of sending money via Gmail, but also realize how hackers' sophistication always renders the Internet less than 100% safe.
  1. What are some high-profile examples of wash trading schemes?

    In 2012, the Royal Bank of Canada (RBC) was accused of a complex wash trading scheme to profit from a Canadian tax provision, ... Read Full Answer >>
  2. What are examples of inherent risk?

    Inherent risk is the risk imposed by complex transactions that require significant estimation in assessing the impact on ... Read Full Answer >>
  3. What is the difference between wash trading and insider trading?

    Wash trading is an illegal trading activity that artificially pumps up trading volume in a stock without the stock ever changing ... Read Full Answer >>
  4. How did Enron use off-balance-sheet items to hide huge debts and toxic assets?

    Prior to its infamous accounting scandals and collapse, Enron used off-balance-sheet special purpose vehicles (SPVs) to hide ... Read Full Answer >>
  5. What impact did the Sarbanes-Oxley Act have on corporate governance in the United ...

    After a prolonged period of corporate scandals involving large public companies from 2000 to 2002, the Sarbanes-Oxley Act ... Read Full Answer >>
  6. Where did the term 'Nostro' account come from?

    The term "nostro" is Italian in origin. It means "our" or "ours." In accounting and finance, nostro accounts are often differentiated ... Read Full Answer >>

You May Also Like

Trading Center