Martha Stewart guilty of lying

Stewart must wait months before hearing her sentence

US lifestyle guru Martha Stewart has been found guilty of lying to investigators over a suspicious sale of shares in drug company ImClone.

Stewart was found guilty of conspiracy, making false statements and obstruction of justice.

Faced with a possible jail sentence, Stewart said she was "distressed" by the jury's verdict and would appeal.

One juror suggested the verdict sent a message to investment "bigwigs" that nobody was above the law.

"Maybe it's a victory for the little guys who lose money in the markets thanks to these kinds of transactions," Chappell Hartridge said.

Each charge against Stewart carries up to five years in prison but legal experts say she is unlikely to receive the stiffest possible sentence.

Sentencing has been set for 17 June.

Appeal

Stewart's former stockbroker, Peter Bacanovic, was found guilty of four of the five charges against him.

I will appeal the verdict and continue to fight to clear my name Martha Stewart

He was acquitted of one charge of making a false statement.

Charges of securities fraud against Stewart and Bacanovic, which carried a maximum 10-year jail term, had been dismissed last week.

"I am obviously distressed by the jury's verdict but... I will appeal the verdict and continue to fight to clear my name," Stewart said in a statement on her website.

An earlier message said Stewart was taking comfort "in knowing that I have done nothing wrong" but that was soon replaced.

Share deal

The charges centred on a sale by Stewart of $228,000 worth of shares in ImClone Systems on 27 December 2001.

The sale came a day before ImClone announced that the US Food and Drug Administration had not approved its anti-cancer drug, Erbitux.

Peter Bacanovic was found guilty of four of the five charges against him

The news led to a sharp fall in ImClone's shares.

Stewart said that she had an agreement to sell shares in the company when the stock price fell below $60.

But the government argued she sold the shares because she had been tipped off in advance about the FDA announcement.

ImClone's chief executive Sam Waksal has admitted he sold shares ahead of the announcement and is serving a seven-year jail term for insider trading.

Business threat

Martha Stewart has become a household name in the US through her stable of books, magazines and TV shows.

Her products give advice on how to eat, dress, marry, garden and entertain in greater style.

Her success enabled her to build her company, Martha Stewart Living Omnimedia, into a powerful business.

Stewart stepped down from the positions of chairman and chief executive last year when she was first charged, and she now holds the title of chief creative officer.

The company issued a statement saying it was "deeply saddened by the news of Martha Stewart's conviction".

"Our board of directors will meet promptly to carefully evaluate the current situation and take actions as appropriate," the firm said.

"We are confident that our assets... are more than sufficient to continue MSO's development as a leading 'how to' brand building company."

Analysts have speculated that the business could face a battle to survive given that it is so closely tied to Stewart's name.

On Thursday, Martha Stewart Living had revealed that the negative publicity surrounding the trial had hit revenues, with advertising pages at its main magazine down 35% last year.

Shares in the company closed down 23% on the New York Stock Exchange after the guilty verdicts became known.