Martha Stewart Sued by Her Firm’s Shareholders

Martha Stewart was sued by shareholders of her media and housewares company who say she and eight current or former officials withheld information about federal probes of Stewart’s trading in another company’s stock when they sold $79 million in Martha Stewart Living Omnimedia Inc. shares.

In another development, her attorneys agreed to show additional information to congressional investigators probing her sale of ImClone Systems Inc. stock after complaints that portions of the 1,000 pages she turned over on Tuesday were blacked out.

The lawsuit alleges that Stewart, who is chairwoman and chief executive of the company that bears her name, sold 3 million Martha Stewart Living shares for $45 million on Jan. 8. That came 12 days after she sold 3,928 shares of ImClone stock.

The Justice Department, the Securities and Exchange Commission and Congress are investigating Stewart for possible insider trading in her sale of the shares.

Martha Stewart Living shareholder Howard Rosen contends that Stewart and other company insiders violated civil securities laws by failing to disclose what they knew about the ImClone sale and the government investigations that ensued.

The suit seeks class-action status for shareholders who bought the stock from Jan. 8 to July 24, when shares dropped 42% to $9.05.

Martha Stewart Living shares fell 14 cents to $8.91 on the New York Stock Exchange.