Martha Stewart sued on charges she unloaded own stock

NEW YORK -- An investor in Martha Stewart's company has filed a lawsuit alleging she dumped shares of her own stock because she knew their value would drop if she was investigated on suspicion of insider trading in the ImClone case.

The lawsuit against Stewart was filed in U.S. District Court in Manhattan on behalf of Howard Rosen, a shareholder in Martha Stewart Living Omnimedia Inc.

It alleges that Stewart and other executives sold about 5.3 million shares in the company worth over $79 million to avoid losses they would suffer after the ImClone scandal surfaced in June.

Stewart had announced Jan. 8 she had sold 3 million shares, or 9 percent of her stake, to ValueAct Capital Management, a hedge fund, for $45 million.

The domestic design tycoon is being investigated to determine whether she sold shares of ImClone because she had information that the Food and Drug Administration was going to reject the company's application for its new colon cancer drug.

Stewart was friends with the founder of ImClone, Sam Waksal, who is accused of illegally advising family to sell ImClone stock in December after learning of the FDA rejection, but before it was announced. Stewart says she didn't know about the decision before the public.