By George Anderson
Federal prosecutors will seek an indictment against Martha Stewart in connection with the sale of 4,000 shares of ImClone, according to her company, Martha Stewart Living Omnimedia.
Company shares fell $1.68 to $9.52 after the announcement.
While the exact counts being sought against Ms. Stewart are not known, speculation has centered on possible insider-trading violations and obstruction of justice charges.
According to the Associated Press, Ms. Stewart sold her shares "one day before the Food and Drug Administration announced it would not review ImClone's application for approval of Erbitux."
Ms. Stewart is a friend of Samuel Waksal, founder of ImClone, who has pleaded guilty to six counts of insider-trading.
She has maintained her innocence all along saying she had a standing order with her broker to sell her ImClone shares once the stock fell below $60.
Moderator's Comment: Will Martha Stewart's legal problems finally begin to affect sales of her line of products in Kmart?
So far consumers have made the distinction between Martha Stewart the person and Martha Stewart the brand. Sales of her name brand items at Kmart have been growing even with the chain closing stores.
Anthony Sabino, associate professor of law at St. John's University doesn't believe Ms. Stewart's line will remain teflon-coated forever. He told AP, "There's no doubt people are going to say: 'I don't think Martha Stewart is a nice person any more; I don't think I'm going to buy her products.' Kmart needs every ounce of marketing strength they can gather. This cloud over Martha Stewart is a cloud over them." [George Anderson - Moderator]