updated 1/19/2005 4:58:43 PM ET 2005-01-19T21:58:43

Sam Waksal, the imprisoned ImClone Systems Inc. founder at the center of an insider-trading scandal that ensnared Martha Stewart, and his father have agreed to pay a total of some $5 million to resolve civil charges in the case, regulators announced Wednesday.

Sam and Jack Waksal neither admitted nor denied wrongdoing in the settlement with the Securities and Exchange Commission.

Sam Waksal pleaded guilty in late 2002 to securities fraud for tipping his daughter, Aliza, to dump ImClone stock just before the Food and Drug Administration publicly announced it was refusing to accept the company’s application to market the colon cancer drug Erbitux. He is serving a seven-year, three-month sentence at a federal prison in Pennsylvania.

Waksal, who once rubbed shoulders with stars like Mick Jagger and cut a flamboyant figure in the pharmaceutical industry as ImClone’s CEO, appeared frequently on the society pages with his friend Stewart. He was the first high-profile corporate executive to be convicted and imprisoned in the series of business scandals that began in 2002, and his sentence was at the high end of the range suggested by federal guidelines for his crimes.

In a partial settlement of related civil charges brought by the SEC, Sam Waksal agreed in March 2003 to an $800,000 fine and a lifetime ban on serving as an officer or director of any publicly traded company.

The SEC filed insider-trading charges against Jack Waksal in October 2003, accusing the father of having sold more than $8 million of stock based on a tip from his son.

The agency said the new settlement with the Waksals, awaiting approval by the federal court in Manhattan, will resolve all of its insider-trading charges against the two. Under the accord, they together are paying about $3 million in civil fines and some $2 million in restitution plus interest.

“This settlement serves as a reminder to chief executives that the insider-trading laws are integral to maintaining fairness in our marketplace,” Mark Schonfeld, director of the SEC’s regional office in New York, said in a statement.

Lewis Liman, an attorney representing Sam Waksal, said his client “deeply regrets this period in his life” and “is glad to have resolved this matter amicably and to have it behind him and his family.”

Jack Waksal’s lawyer John Harris said the settlement “avoids the enormous toll that litigating with the Securities and Exchange Commission would have exacted on Jack Waksal, his wife and their family.”

The now-imprisoned Stewart was convicted last March of lying to federal investigators about why she sold 3,928 shares of ImClone stock in December 2001, just before the price plunged. Prosecutors said it was because of a tip that Sam Waksal was selling his shares, but Stewart and her stock broker maintained they had a prior plan to sell ImClone at $60 a share.

Stewart, who was sentenced last summer and is appealing her conviction, is less than two months away from the end of her term at a federal camp in Alderson, W.Va. After her scheduled release in early March, she must spend five months confined to her home in Bedford, N.Y., with limited exceptions for work. She plans to launch a new daytime talk show this fall.

The judge in Sam Waksal’s trial said that Aliza Waksal saved more than $630,000 when she sold her ImClone stock at her father’s urging. He also said Sam Waksal tried to save more than $1 million himself by transferring his own stock to Aliza’s account.

Aliza was not charged with a crime, and some legal analysts have speculated that Sam Waksal’s guilty plea was partly designed to save his daughter from prosecution.

ImClone’s drug, Erbitux, won FDA approval in February 2004 as a last-ditch treatment for advanced colorectal cancer. Doctors believe that roughly 20,000 patients a year might benefit from Erbitux, one of a new group of cancer medicines that jam chemical signals which spur tumor growth. But they caution that Erbitux is not a miracle drug.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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