District Judge John E Sprizzo on Monday gave a green light to a securities class-action suit against America’s TV style sweetheart Martha Stewart and Martha Stewart Living Omnimedia, the multimillion dollar corporate alter ego she founded to exploit her fame.
The suit is filed on behalf of shareholders in Stewart’s company, alleging that she and other MSLO executives misled investors by failing to disclose that she was under federal investigation when the executives sold $79 million (€67.63; £48.17m) of company stock in early 2002. The stock, worth $20.93 in March 2002, is now trading at around $10.
It is likely that only the inhabitants of Ursa Minor are unaware that Stewart is under investigation both by the US Justice Department and the Securities and Exchange Commission for alleged insider dealing when she sold Imclone Systems stock just days before its white hope cancer drug was refused a license for medical prescription.
It is claimed the sale followed a tip-off from the company’s chairman Samuel D Waksal, a close friend who has since confessed to insider-trading.
The next phase of the civil case against Stewart is for plaintiffs' lawyers to advance to the ‘discovery phase’ in which they can review documents and interview potential witnesses.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff