An investor in Martha Stewart's company has filed a lawsuit against the lifestyle guru.

The lawsuit alleges that Ms Stewart sold shares in her own company, Martha Stewart Living Omnimedia, because she knew she could be investigated on suspicion of insider trading in the ImClone case.

Since the allegations of insider trading at biotech company ImClone have emerged, shares in Martha Stewart Living Omnimedia have plunged, losing about half of their value.

"Being a former stockbroker, Stewart knew that the suspicious timing of her ImClone stock sales would bring public, if not legal, scrutiny," the lawsuit said.

Scandal fall-out

Ms Stewart is being investigated for insider trading after she sold shares in ImClone a day before regulators refused to review the company's cancer drug.

Sam Waksal, ImClone's former chairman and a close friend of Ms Stewart, was arrested on insider-trading charges on 12 June.

Omnimedia warned earlier this month that advertising revenue would be hurt by the uncertainty surrounding the insider trading investigation.

Howard Rosen, the shareholder bringing the case, said he hoped to achieve class action status for investors who bought shares in the company between 8 January and 24 July.

Martha Stewart's company "believes the lawsuit is without foundation, and we intend to defend it aggressively," a spokesman said.

Other lawsuit

Ms Stewart also faces another lawsuit from a shareholder in her company known as Conrad Hahn.

Mr Hahn claims that he has suffered losses of $75,000 as a result of her involvement in the insider-trading scandal.

He maintains that the scandal has sparked a drop in the value of Martha Stewart Living's shares.