SEC TO FILE FRAUD CHARGES AGAINST MARTHA STEWART

Report Says Lawyers Notified of Pending Action Over Stock Sale

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WASHINGTON (AdAge.com) -- The Securities and Exchange Commission declined to confirm a report in the online edition of The Wall Street Journal late this
Photo: Jeff Topping
Martha Stewart on Sunday at the Arizona Biltmore, where she is attending the American Magazine Conference.
afternoon that SEC staff has told Martha Stewart's lawyers it will recommend filing civil securities fraud charges against her.

An SEC spokeswoman told AdAge.com that "as a matter of policy" the SEC declines to confirm actions against individuals until charges are actually filed. A spokesman for Ms. Stewart's Martha Stewart Living Omnimedia was not immediately available for comment. Ms. Stewart is chairman-CEO of the company, which publishes Martha Stewart Living.

4,000 ImClone shares
The SEC action stems from Ms. Stewart's sale of 4,000 shares of ImClone stock in late December, shortly after a conversation with representatives of her broker Peter Bacanovic and shortly after ImClone learned of the FDA's plan to reject a major new cancer drug.

Ms. Stewart has contended her

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stock sale was the result of a pre-existing arrangement with her broker and not due to inside information, but leaders of a congressional committee have questioned whether she was entirely forthright in explaining what happened.

Congressional letter
In a Sept. 10 letter to Attorney General John Ashcroft, U.S. Rep. Billy Tauzin, R-La., joined by ranking Democratic and GOP members of his committee, called for a probe into whether Ms. Stewart "knowingly caused materially false representations" to be made to the committee about the reason her shares were sold.

Committee officials were not immediately available for comment today on the report.

The Journal posted its story after the stock market closed today. Martha Stewart Omnimedia's stock closed today at $7.50, up 75 cents; it dropped in after-market trading to $6.40, still above the all-time low of $5.26 hit earlier this month.

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