Shares of Martha Stewart Living Omnimedia Inc. fell in trading Thursday after a published report said an assistant at Merrill Lynch & Co. has agreed to plead guilty to a misdemeanor and testify against Martha Stewart and others in the federal investigation of stock sales in ImClone Systems Inc. last year.
The Wall Street Journal reported that prosecutors had sought to charge the assistant, Douglas Faneuil, with a felony for making false statements to investigators but later agreed to a misdemeanor charge in exchange for his cooperation. The newspaper cited people familiar with the discussions.
The charge is expected to be filed within days.
Shares of Martha Stewart Living declined 60 cents, or 7.7%, to close at $7.20 on the New York Stock Exchange.
Through his lawyer, Faneuil declined to comment, as did the U.S. attorney's office in New York. A spokesperson for Stewart also declined to comment Thursday, but in the past she has denied wrongdoing.
Merrill Lynch handled Stewart's sale of nearly 4,000 ImClone shares in late December, shortly before the company announced that federal regulators would not review the company's cancer drug Erbitux.