August 7, 2006
Martha Stewart settles SEC’s insider trading case
By Karey Wutkowski
WASHINGTON (Reuters) - Martha Stewart agreed to limit her
role at her lifestyle media empire Martha Stewart Living
Omnimedia Inc. for five years under a settlement resolving
civil insider trading charges, the U.S. Securities and Exchange
Commission said on Monday.
She will also pay $195,000 and be banned for five years
from serving as a director of a public company, the SEC said.
Once holding the titles of chairman and chief executive at
Omnimedia, Stewart resigned those roles in 2003 after being
investigated on allegations she profited from inside
information about ImClone Systems and then lied to federal
prosecutors about it.
She assumed the role of chief creative officer but resigned
from that post after being convicted in a related criminal case
in March 2004. She currently is listed as founder of Omnimedia,
a non-officer position.
Under the SEC settlement, she can serve as an officer or
employee of a public company but will be prohibited for five
years from activities involving financial reporting, financial
disclosure, internal controls, SEC filings, and federal
securities compliance monitoring.
Omnimedia said in a statement it was happy the case had
been resolved. "The settlement allows Martha to continue in her
role as founder and as the creative force behind the brand."
Helene Glotzer, associate regional director of the SEC's
Northeast office, said setting limits on activities as an
officer was uncommon in SEC settlements.
"We did not want to limit Ms. Stewart's role as a creative
force in the company; that's why the bar was tailored," Glotzer
told Reuters by telephone.
Stewart served five months in prison and five more months
of house arrest as part of her criminal conviction.
Glotzer said Stewart's five-year periods will start once a
judge enters final judgments in the SEC case, which could take
about a month.
"This brings closure to a personal matter and my personal
nightmare has come to an end," Stewart said in a statement.
Peter Bacanovic, Stewart's former broker, also settled with
the SEC, agreeing to pay about $75,000. Both agreed to the
settlements without admitting or denying the charges.
Bacanovic's attorney, Rich Strassberg of the law firm
Goodwin Procter, said: "This settlement in which Mr. Bacanovic
did not admit or deny the allegations concludes this painful
matter for him."
Shares of Omnimedia were trading up 20 cents at $17.08 in
early afternoon trading on the New York Stock Exchange.