Closing Arguments in Stewart Trading Case

Closing arguments in Martha Stewart’s trial are scheduled to begin today in federal court in Manhattan.

Stewart, 62, and co-defendant Peter E. Bacanovic, 41, her former stockbroker, face four felony counts -- each carrying a sentence of as much as five years in prison -- in a trial that probably will go to the jury Wednesday.

On Friday, the judge threw out the most serious charge against Stewart, ruling that the government failed to prove the media magnate intended to commit securities fraud. The charge carried a 10-year sentence.

“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 company,” U.S. District Judge Miriam Goldman Cedarbaum wrote.

Stewart and Bacanovic are accused of lying to investigators and conspiring to obstruct justice by inventing a phony cover story about why Stewart sold 3,928 shares of ImClone Systems Inc. stock Dec. 27, 2001.

Stewart and Bacanovic insist that they had a prior agreement to sell the stock if it fell to $60 a share. Prosecutors say Stewart sold because Bacanovic ordered an aide to pass her a tip that ImClone founder Samuel D. Waksal was trying to unload his shares. A regulatory setback that caused ImClone stock to plunge came a day after Stewart’s sale.

The fraud charge accused Stewart of intentionally misleading investors in her company, Martha Stewart Living Omnimedia Inc., to keep the company’s stock from slipping.