Martha Still In Hot Water?

(AP)  Federal securities regulators have told Martha Stewart they've decided to file civil insider-trading charges against her in the coming weeks, New York's Daily News reports in its Saturday editions.

The News quotes two sources as saying that if convicted of the charges, she would probably have to pay a fine and resign as president of her multimillion-dollar namesake company, Martha Stewart Living Omnimedia.

The notice to the embattled Stewart followed months of legal wrangling before the Securities and Exchange Commission, where Stewart argued she did not violate insider-trading rules when she sold 4,000 shares of ImClone Systems stock Dec. 27, 2001 - just before it tanked, the newspaper points out.

But in recent days, the SEC's five commissioners rejected her arguments and set in motion the process of filing a civil lawsuit in Manhattan Federal Court against Stewart, the news says. A spokesman for the SEC declined to comment to the News.

Once the charges are filed, the SEC will seek fines from Stewart totaling three times the amount they claim she saved by dumping her stock in the nick of time, The News says.

For a woman who owns several homes and has millions tucked away, she will not be staggered by a fine that's expected to total about $120,000.

But a conviction could force Stewart out as the head of her decorating empire, the News explains.

A more serious matter is the ongoing criminal investigation by Manhattan U.S. Attorney Jim Comey. His securities unit has targeted Stewart for possible criminal insider-trading and obstruction of justice charges, sources have told the News.

Stewart gave her version of events regarding the ImClone stock sale to an FBI agent and an assistant U.S. attorney during an interview in April.

The FBI since has been looking into whether Stewart was involved in insider trading and whether she lied to them during that interview, according to the News.

Stewart now likely will try to negotiate with both the SEC and federal prosecutors to try to resolve the matter without having to be charged with a felony, the News says.

If Comey decides to bring criminal charges against Stewart, he will coordinate that filing with the SEC's civil suit, the sources told the News.

Her longtime friend, ImClone founder Sam Waksal, pleaded guilty to tipping his daughter and father to dump their stock just before the government shot down the company's anti-cancer drug, Erbitux.

And Douglas Faneuil, a low-level assistant to Stewart's stockbroker, pleaded guilty to participating in the alleged scheme and is cooperating with the FBI.

The Daily News reported last week that prosecutors had restarted the criminal probe after a holiday break by re-interviewing Faneuil and other witnesses.

Stewart's spokeswoman, Allyn Magrino, did not return calls from the News seeking comment.