American homemaking guru Martha Stewart faces a fresh setback in her attempts to salvage her reputation from a distinctly unwholesome insider trading scandal.

The new blow comes in the shape of a class action lawsuit filed in Manhattan on Monday. Citing an undisclosed former executive of Martha Stewart Living Omnimedia (the domestic oracle’s media firm), it alleges that MSLO senior executives were involved in illegal sales of the company’s stock.

Stewart is under federal investigation over a separate insider trading scandal – her sale of nearly 4,000 shares in biotech firm ImClone the day before its stock slumped on news regulators had refused approval for its cancer treatment.

It is alleged she was tipped off about the drug’s rejection by ImClone ceo Sam Waksal, though Stewart claims the sale was the result of a longstanding agreement with her broker to dispose of the shares when they fell below $60 (€55; £36).

The new lawsuit claims Stewart and other senior MSLO staff were aware of the federal probe before the news became public. It is alleged certain executives then disposed of their shares in the company, realising the negative publicity would hurt prices.

States the suit: “The former [MSLO] employee attended a meeting in [president] Sharon Patrick's office in March 2002. The ImClone/Stewart investigation was being discussed, including its likely adverse impact on [MSLO] shares.”

According to filings with the Securities & Exchange Commission, Patrick and other executives (Greg Blatt, Margret Roach, Gael Towey, Dora Cardinale, Lauren Stanich and Suzanne Sobel) sold MSLO shares between March and May last year at prices of $17.95 to $20. The company’s stock currently trades at around $9.20.

Data sourced from:; additional content by WARC staff