The former boss at biotechnology firm ImClone Systems has been indicted for fraud in an alleged insider trading scandal.

Samuel Waksal - who has also been charged with bank fraud and obstruction of justice - had hoped to reach a deal with prosecutors and avoid an indictment.

Mr Waksal stands accused of tipping family members and others to sell ImClone shares the day before federal regulators refused to review its new cancer drug.

The scandal has gained momentum in recent weeks, with pressure growing on Martha Stewart, the high-profile US 'homemaker', to testify about her sale of shares as well.

In after hours trading, shares in ImClone fell six cents to $6.60.

Secrets shared

The charges arise out of the sale of ImClone stock in late December by Sam Waksal and members of his family.

The SEC and the Department of Justice allege that the decision to sell was based on knowledge passed from Mr Waksal to his family and at least two others.

On 26 December, relatives sold $19m (�12.9m) worth of ImClone stock, two days before the FDA announced it would not review Erbitux, ImClone's cancer-fighting drug.

According to papers filed with the court on Wednesday, Mr Waksal learned on 25 December of the probable FDA action from his brother, who now serves as ImClone's current chief executive.

Based on that information, Mr Waksal allegedly attempted to sell nearly 80,000 shares of the company's stock but was blocked by doing so by two brokerage firms.

Among those who sold shares were Mr Waksal's daughter, Aliza, and other family members, including another daughter and her husband.

In addition, domesticity-guru Martha Stewart unloaded all 3,000 of her shares two days before the FDA action, although she has denied acting on non-public information.