Martha Stewart Settles With Feds
SEC fines her $195,000 in civil case
Stewart, who served a short prison sentence on charges stemming from a suspect stock sale, has agreed to pay $195,000 in fines related to civil insider-trading charges. The fine pretty well ends the legal wrangling surrounding the case, which began close to five years ago.
Stewart's former broker, Peter Bacanovic, also agreed to pay $75,000 in fines in an agreement with the federal Securities and Exchange Commission.
As part of the agreement, Stewart also agrees not to serve as a director of a public company -- including her own, Martha Stewart Living Omnimedia -- for five years. She also has to limit "the scope of her service" as an officer or employee of any publicly traded firm.
To recap: In December 2001, Stewart sold shares of a biotechnology firm called ImClone just before the stock took a nosedive. She maintained that she had a standing order with Bacanovic to sell the stock if its price dropped below $60. The government begged to differ and charged her with securities fraud and other charges.
The fraud charge was thrown out in her trial, but Stewart was convicted of obstruction of justice, two counts of lying to federal investigators and conspiracy. She served a five-month sentence at a federal prison in West Virginia, followed by several more months of home confinement. She remains on probation until next year.
In the civil case, Stewart will pay $45,673 in losses the SEC says she avoided by selling the ImClone stock, plus a penalty of $137,019 -- three times the amount of the loss avoided -- and $12,000-plus in interest.