Martha Stewart and her broker, Peter Bacanovic, have settled with the U.S. Securities and Exchange Commission concerning insider trading charges relating to Stewart’s sale of ImClone Systems stock in December 2001.

Under the settlement, Stewart agrees to an injunction, disgorgement of losses she avoided, and the maximum penalty of three times the losses she avoided, for a total of about US$195,000 in monetary relief. Stewart also agrees to a five-year bar from serving as a director of a public company and a five-year limitation on the scope of her service as an officer or employee of a public company.

Bacanovic agrees to an injunction and to pay disgorgement of commissions and a penalty totaling approximately US$75,000. In a separate order, the commission previously barred Bacanovic from associating with a broker, dealer or investment adviser.

The SEC is filing the proposed final judgments with the U.S. District Court in Manhattan for consideration and approval. The defendants consented to the judgments without admitting or denying the allegations in the complaint.

“This settlement achieves everything we sought to accomplish in pursuing this case. The combination of monetary relief and future professional restrictions serve both to sanction the defendants’ insider trading and to restrict them from future positions of investor trust,” said Mark Schonfeld, director of the commission’s Northeast Regional Office.

The SEC’s complaint, filed in June 2003, alleges that on Dec. 27, 2001, Bacanovic, then a broker, illegally tipped his client, Stewart, with the non-public information that the then-CEO of ImClone Systems, Sam Waksal, and his daughter were selling their ImClone stock. Based on this information, Stewart sold all of her ImClone stock. The next day, ImClone announced that the FDA had refused to file ImClone’s license application for a new cancer drug, Erbitux, and ImClone’s stock price dropped 16%. The complaint alleges that Stewart and Bacanovic violated the antifraud provisions of the federal securities laws.