Martha Stewart Loses a Round in Court

A federal judge won't dismiss a couple of counts and keeps Stewart's case to her stockbroker's.
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A federal judge on Tuesday denied Martha Stewart's bid to dismiss two of the criminal charges filed against her.

Stewart had sought the dismissal of a charge of obstruction of justice and a charge of securities fraud related to an allegedly false statement. Both charges stem from the federal government's investigation into Stewart's sale of stock in

ImClone Systems

(IMCL)

one day before the stock plummeted on news of a regulatory setback for the drug company.

U.S. District Judge Miriam Goldman Cedarbaum also rejected a motion by Peter Bacanovic, Stewart's former stock broker, to separate his trial from Stewart's.

Marvin Smilon, a spokesman for the U.S. attorney's office for the Southern District of New York, declined to comment on the rulings. Attorneys representing Stewart and Bacanovic did not return calls seeking comment.

The criminal case against Stewart and Bacanovic is scheduled to go to trial in January.

The false statement charge against Stewart relates to comments she made to

The Wall Street Journal

that she had a standing agreement with Bacanovic to sell shares of ImClone if the stock fell below $60 a share. Federal prosecutors have charged that Stewart's comments to the

Journal

were untrue and made merely to prop up the stock of her namesake company,

Martha Stewart Living Omnimedia

(MSO)

, in which she holds the vast majority of stock.

Stewart also faces criminal charges related to other allegedly false statements she made, and a charge of criminal conspiracy. Also, the

Securities and Exchange Commission

has filed civil insider trading charges against Stewart.

The investigation into the stock trade and Stewart's subsequent indictment have rocked the namesake company of the home-lifestyle maven. In its most recent quarter, Martha Stewart Omnimedia

reported that its revenue fell 28% from the year-ago period. At its core publishing division, sales fell a whopping 37%.

Shares of Martha Stewart Omnimedia fell 10 cents, or 1%, to $10.18, in regular trading on Tuesday.