Witness in Stewart Trial Sentenced

Douglas Faneuil, the former Merrill Lynch broker's assistant whose court testimony helped sink Martha Stewart, was fined $2000 and given no probation at his sentencing Friday.

The ruling comes a week after Martha Stewart, the former CEO and now chief creative officer to Martha Stewart Living Omnimedia ( MSO), was sentenced to five months in prison, five more months of home detention and two years of probation by a federal judge. Stewart was found guilty of lying to regulators about her sale of 4,000 shares of ImClone ( IMCL) ahead of a negative FDA ruling, which caused the shares to plunge.

Stewart's stockbroker and Faneuil's former boss, Peter Bacanovic, received the same prison sentence as Stewart. Stewart was fined $30,000; Bacanovic, $4,000.

During the trial, Faneuil testified that on the busy morning of December 27, 2001, Bacanovic was on vacation in Florida when he received a stream of calls from the family of ImClone founder Sam Waksal requesting he immediately sell their shares in the biotech company.

Faneuil told the court he immediately informed Bacanovic about the Waksal family sales whereupon Bacanovic instructed him to call Stewart and tell her to sell her 4,000 shares of the company.

Faneuil said he was ordered by Bacanovic to tell inquiring investigators that Stewart's fortuitous sale was actually a result of a $60 limit order previously agreed to by Stewart and Bacanovic. In return for his cooperation, Faneuil said he received a raise in salary, plane tickets and extra vacation days.

After Sam Waksal was arrested for insider trading in June 2002, Faneuil broke rank and informed regulators about the true circumstances surrounding Stewart's trade. On October 2, 2002, Faneuil pled guilty to one count of receiving money or "other valuable things" for not informing authorities about a violation of securities laws.

Bacanovic and Stewart maintained throughout the trial that the sale of Stewart's ImClone shares was based upon a limit order to sell at $60.

Faneuil, a Vassar College graduate, began working at Merrill Lynch as an assistant to broker Peter Bacanovic in June 2001 and is currently working at a New York art gallery.

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