This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Judge Tosses Fraud Charge Against Stewart

Updated from 12:58 p.m. EST

Judge Miriam Goldman Cedarbaum's decision to dismiss criminal securities fraud charges against Martha Stewart on Friday was bold jurisprudence with implications for her civil case, lawyers said.

The count might have been a legal long-shot, but Cedarbaum's dismissal also took the stock market off guard, igniting a short squeeze in Martha Stewart Living (MSO) on the single heaviest day of trading in its public history. Shares closed up $1.43, or 10.9%, to $14.53 after touching a 52-week high of $15.25 earlier.

In the securities fraud charge, prosecutors had alleged Stewart's many claims of innocence following her now-famous sale of ImClone Systems stock in December 2001 amounted to a plot to boost shares of Martha Stewart Living.

Of all the charges against Martha Stewart, the securities fraud allegation was most perilous because it carried the most jail time: 10 years.

"In assessing the sufficiency of the evidence, I have concluded that no reasonable juror can find beyond a reasonable doubt that the defendant lied for the purpose of influencing the market for the securities of her own company," Judge Cedarbaum wrote. "Another way of putting it would be that in order to find the essential element of criminal intent beyond a reasonable doubt, a rational juror would have to speculate."

Cedarbaum had previously said the allegation was problematic and relied on a novel interpretation of existing law. The government's case suffered a fatal blow two weeks ago when Cedarbaum refused to let expert witnesses testify on the matter.

Legal observers said Cedarbaum's ruling was daring this late in the trial.

"It took a lot of guts for the judge to dismiss that count at this stage of the proceedings," says defense attorney Labe Richman. "Most judges would have waited for the jury to reach the issue so as to avoid a decision against the government and to protect the government's right to appeal."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MSO $0.00 0.00%
IMCL $0.13 -3.95%
AAPL $94.19 -1.04%
FB $118.06 0.54%
GOOG $695.70 0.48%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs