Home ECONOMY Martha Stewart sells stock in company despite recent insider position

Martha Stewart sells stock in company despite recent insider position

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Martha Stewart’s stock trading is raising eyebrows again.

The 79-year-old domestic diva — who famously served five months in prison for lying to the Fed about selling Imclone shares in 2004 and 2005 — was valued at more than $67,000 in Sequential Brands Group in a pair of transactions last month. sell stock. , show securities filings.

The June 4 and June 7 sales – in which Stewart unloaded 3,000 and 3,266 shares at prices of $10.74 and $10.82 respectively – were completed just two days before Acesparks’s report that the struggling licensing firm was Preparing for a Potential Bankruptcy Filing.

Shares of Sequential — which is reportedly preparing to file for Chapter 11 as it negotiates a deal to sell the Jessica Simpson clothing brand to the 40-year-old pop singer — tanked 11 percent on Acesparks reports. Since then they have been getting worse. On Thursday, they closed at $8.30 — up 23 percent from where Stewart unloaded them at an average price of $10.78.

Martha Stewart arrives at the 2020 Vanity Fair Oscar Party hosted by Radhika Jones at the Wallis Annenberg Center for the Performing Arts on February 09, 2020 in Beverly Hills, California.
Martha Stewart sold shares of the licensing firm Sequential shortly after leaving the board, even as the company headed for bankruptcy.
Getty Images

There’s no indication that Stewart knew the Acesparks report was coming, and trouble with Sequential was not new at the time. A month earlier on May 4, The Post reported on the company’s woes amid Jessica Simpson talks, noting that a deal with lender KKR to install a distressed-debt specialist on its board was in preparation for bankruptcy. seemed like a possible move.

On Thursday, a lawyer for Stewart noted that he had left Sequential’s board at the end of March, as disclosed in a securities filing, and that the company reported its year-end results in April and May, senior An announcement was made about the resignation of the officers and its changes. Credit agreement among other matters.

“Martha had no prior knowledge of any of these decisions,” the lawyer said in a statement. “In early June, after all of this disclosure and more than two months after resigning, she made two publicly disclosed very small stock trades pursuant to SEC regulations.”

Stock chart showing where Martha Stewart sold sequential shares on June 4 and June 7 and the stock declined after reporting her bankruptcy plans on June 9.
Martha Stewart sold shares in sequential order on June 4 and June 7. She was a director of the company, which Acesparks reported was headed for bankruptcy on June 9.
NY Post Photo Composite

The attorney said that Stewart “did not have any non-public information, that his transactions were fully compliant with applicable regulations and any speculation to the contrary is simply futile.”

Still, sources close to the company say it’s not a good look, as Stewart was on the company’s board and had been aware of its financial turmoil during the crucial months since December, when the company was forced to relinquish its assets. A complaint was received from the Securities and Exchange Commission on Accounting. Practice.

A source close to the company told The Post, “Discussions have been going on since last year, with potential bankruptcy this year and about selling through bankruptcy.”

Stewart has sold no more stocks and remains the second largest investor in Sequential, with over 200,000 shares.

Jessica Simpson in a tight black panther sitting in a black and white chair.
Jessica Simpson is trying to buy her brand back from Sequential Brands as it approaches bankruptcy.
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Michael Bachner, securities attorney at the law firm Bachner & Weiner, told The Post, “Although she may have initially believed her trading was fair, she may have stopped trading because someone advised her that trading could be problematic. “

Stewart had stepped down along with three other directors to reshuffle the board in exchange for a waiver on the penalty of their debt as part of a deal with the lenders. But he is the only former director known to have sold shares. Former directors Al Gosset, John Dion and Gary Johnson did not respond to requests for comment.

A spokesperson for Sequential declined to comment.

Former executive chairman William Sweidler, meanwhile, remains the largest shareholder and has retained his 13 percent stake, according to the filing. Ex-director Stewart Leonard Jr., the owner of the New York-area grocery chain, told The Post that he’s also grabbed his stake.

“I’m not a Wall Street guy or a public stock guru,” Leonard told The Post, refusing to comment on Stewart’s trading, which he said he knew nothing of. “At this point, I’m not selling. I’ll stop and see what happens.”

Martha Stewart arrives in Manhattan federal court on Tuesday, January 20, 2004 in New York.
Martha Stewart arrives in Manhattan federal court on January 20, 2004 in New York.
bloomberg news

If Stewart had learned that Sequential was preparing for bankruptcy by virtue of its director’s seat, “it would be unfair for it to trade on that information, even if that information is the subject of public speculation,” said securities attorney Bachner. “Knowing something as a fact is more important for an investor than just anticipating that the event will occur – no matter how intelligent the speculation may be.”

But other experts say the situation is not so clear, despite Stewart being the most recent director.

Securities attorney Pablo Quinones told The Post, “When he sold the stock, he either had material, non-public information, or he didn’t.” “If the material information was a pending bankruptcy and that information was public when she did business, it may not matter if she previously learned of the information when she was a director.”

Stewart joined Sequential’s board in 2015, when the firm bought her company, Martha Stewart Living Omnimedia, for $353 million. Four years later in 2019, Sequential sold the brand to another licensing firm for $140 million less than the company paid for.

At the time, sources told The Post that Stewart’s salary and allowances, which included $1.8 million in basic pay and a $100,000 expense account, first-class travel, hotel accommodations and hair and makeup services, were judging by the brand’s performance. She was very rich.

In 2004, Stewart began serving two years of probation as well as five months in prison and five months of house arrest for obstruction of justice and for lying to federal investigators as to why he sold his 3,928 ImClone shares, That saved him only $45,673 in damages.

Shares of Imclone fell 16 percent two days after its trade on news that the Food and Drug Administration did not approve its cancer drug. The company’s chief executive officer, Sam Waxel, alerted family members to the bad news and sold more than $10 million of Imclone stock before the FDA news came out.

At the time, Waxel and Stewart had the same broker who tipped Stewart.

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