Martha Stewart Probe Winding Up

The insider trading investigation of Martha Stewart is winding up, the Wall Street Journal reports.

The newspaper said the Justice Department and the Securities and Exchange Commission will make final decisions on how to proceed in the next few weeks.

The home decorating diva is under investigation for her sale of nearly 4,000 shares of ImClone Systems Inc. shares a day before the stock began to plummet on negative regulatory news.

Stewart has said she did nothing wrong when she sold the shares of ImClone shares just before they plunged.

Prosecutors are trying to determine if Stewart was tipped off by her friend Sam Waksal, ImClone's founder and ex-CEO, or her Merrill Lynch broker, Peter Bacanovic.

The Journal said investigators were conducting a final round of interviews with Merrill Lynch supervisors. The newspaper said the investigators are likely to focus on any conversations about the Stewart trade that the supervisors may have had with Bacanovic or his trading assistant, Douglas Faneuil. Faneuil is cooperating with the investigation.

In court papers, prosecutors said the tip, either directly or indirectly, came from Bacanovic. They also said that Bacanovic on Dec. 27 told a client, referred to in the papers as the "tippee," that Waksal was trying to sell all of the ImClone stock that he held at Merrill Lynch.

"The tippee then sold all of the tippee's shares of ImClone stock, approximately 3,928 shares, yielding proceeds of approximately $228,000," the court papers said.

Waksal was indicted last August for allegedly tipping off family members to dump millions of dollars worth of ImClone stock before the bad news about Erbitux hit the markets. In October, Waksal pleaded guilty to bank fraud, securities fraud, conspiracy to obstruct justice and perjury charges.

Stewart has said she had a standing order with Bacanovic to sell the ImClone shares if they fell below $60.