Martha Stewart Close to Settling Civil Case

The domestic diva says she's negotiating, rather than fighting, with the Feds

Martha Stewart, who completed a five-month prison sentence a year ago for lying about her sale of ImClone stock, will not fight the civil insider trading charges brought by the U.S. Securities and Exchange Commission, she announced Wednesday morning.

“We’re close to a happy settlement,” the homemaking expert, 64, said during a Today show interview, in which Ann Curry asked about the status of the case. Stewart did not provide further details.

Initially it appeared that Stewart was going to duke it out with the government in the U.S. District Court for the Southern District of New York, rather than settle the case.

According to the Associated Press, in a response to their complaint that was filed on May 25 (Stewart’s deadline date to reply to the charges), Stewart denied allegations that she used nonpublic information when she sold 3,928 shares of ImClone Systems Inc. stock in December 2001. Instead, she said she “acted in good faith.”

Fighting the charges would have offered Stewart the chance to reclaim her CEO and chairman titles of the company she founded, Martha Stewart Living Omnimedia Inc. But another public trial could deal a blow to the company and reverse the economic turnaround that it has made so far over the past year.

Some legal experts believed it might have been in Stewart’s interest to settle the charges because, despite being an ex-con, she has still been able to wield considerable influence over her multimedia empire.

The June 2003 SEC complaint – filed the same day Stewart was indicted – was stayed until criminal proceedings were completed. With Stewart’s criminal appeals recently exhausted, the SEC lifted the stay in April.

Stewart, who has maintained her innocence, was convicted in March 2004 for lying to federal prosecutors about selling ImClone shares a day before the Food and Drug Administration announced it had declined to review ImClone’s application for its cancer drug Erbitux. The FDA announcement sent ImClone shares plummeting.

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