Hours after being indicted on nine criminal charges, Martha Stewart stepped down as chairwoman and chief executive officer of her media empire.

A statement from Martha Stewart Living Omnimedia Inc. said she would remain on the company's board.

The home decorating icon Stewart entered a not guilty plea after she was indicted Wednesday in an insider trading case that has hung over her for more than a year.

Martha Stewart leaves court
Martha Stewart leaves court

In a 41-page indictment, Stewart was charged with securities fraud, conspiracy, making false statements and obstruction of justice.

Her stock broker, Peter Bacanovic, was also charged with perjury and obstruction, among other charges. Bacanovic also entered a plea of not guilty.

If given the maximum penalty for all the charges, Stewart could face 30 years in prison and $2 million in fines, although a lighter sentence is much more likely. "This criminal case is about lying – lying to the FBI, lying to the SEC, and lying to investors," U.S. Attorney James Comey said during a press conference.




"That is conduct that will not be tolerated by anyone," he said.

"Martha Stewart is being prosecuted not because of who she is, but because of what she did," Comey added.

Arriving shortly before noon ET at a court in Lower Manhattan, Stewart, accompanied by her lawyer, moved through a crowd of media without offering any comments.

In addition to the criminal charges, Stewart and Bakanovic have also been charged by the U.S. Securities and Exchange Commission. Stewart faces charges of insider trading after selling her ImClone stock following a tip from Bacanovic.

SEC regional director Wayne Carlin said regulators are seeking a court order barring Stewart from acting as a director of public company. The SEC also wants to limit her actions as an executive officer at Martha Stewart Living Omnimedia.

Stewart has been under a cloud after investigators began looking into allegations of insider trading in a biotech company, ImClone.

Stewart is alleged to have sold 4,000 shares in ImClone back on Dec. 27, 2001 on inside information that the firm's cancer drug, Erbitux, had been rejected by the Food and Drug Administration.

Stewart is said to have received the information through her friend, Sam Waksal, ImClone's founder and former CEO.

While investigators looked into the trade, Stewart maintained that she had a standing order with Bacanovic to sell her ImClone shares if the stock fell below $60.

Shares of Martha Stewart Living Omnimedia gained more than 5 per cent on Wednesday. The stock rose 48 cents US to close at $10 US on the NYSE.