Risk Management

Martha Stewart Living Settles for $30 Million

Under the deal with plaintiffs, Martha Stewart personally contributed $5 million of her own funds.
Stephen TaubMay 31, 2007

Shareholders of Martha Stewart Living Omnimedia will get $30 million under a settlement approved by a federal judge, according to an announcement by the law firm for the plaintiffs in a class-action lawsuit against the company.

Under the deal, Martha Stewart personally contributed $5 million of her own funds towards the $30 million. “The settlement represents a significant portion of class members’ estimated damages arising from defendants’ alleged wrongful conduct,” according to a press release fired off by Milberg Weiss & Bershad LLP.

The settlement affects shareholders of Martha Stewart Living Omnimedia who bought stock between January 8, 2002 and October 2, 2002. The lawsuit charged that Martha Stewart, the company, and other company executives misled investors by issuing materially false and misleading statements about the risks to the company and its brand stemming from damage to Martha Stewart’s reputation. The reputational risk stemmed from the government’s investigation into Stewart’s December 27, 2001 sale of ImClone Systems common stock, according to the shareholders.

In March 2004, Martha Stewart was convicted for lying about her sales of stock of ImClone. She served five months in prison and five months in home detention.