It May Be No-Win for Martha Stewart Living

Federal regulators left open the possibility that Martha Stewart could remain an officer of her namesake company even if she's found guilty of civil and criminal charges related to her alleged insider trading.

The question is though whether she or the company would want her to do so.

Stewart, the chairman and CEO of Martha Stewart Living Omnimedia MSO, was indicted on Wednesday on charges of conspiracy, obstruction of justice and making false statements. In addition to those criminal charges, the Securities and Exchange Commission brought civil charges against Stewart, accusing her of insider trading.

The charges relate to Stewart's sale of ImClone stock just before the Food and Drug Administration rejected a drug produced by ImClone, a move that sent the company's stock price tumbling.

The SEC is seeking to bar Stewart from serving as a director of Martha Stewart Living or any other public company. And the agency is seeking to limit what she can do at the company as well.

But the SEC chose not to try to bar Stewart from serving as a officer because of the role she plays at her company, said Barry Rashkover, associate director of the SEC's northeast regional office.

"We're seeking a remedy that is appropriate for these particular facts," Rashkover said.

By making that distinction, the SEC may be trying to sidestep the kind of reaction it got for a perceived a heavy-handed approach against Arthur Andersen and Associates.

Critics of the SEC charged that the agency's decision to file a criminal indictment against the whole company was essentially a death warrant. Indeed, following the indictment and its later conviction on the charges, the company lost nearly all of it clients and laid off all but a token staff.

Thus far, Stewart's company appears ready to stand behind her. On Tuesday, they defended her and denied reports that she would step down from the company in response to the charges.