US lifestyle guru Martha Stewart's alleged insider share dealing needs to be investigated by the Justice Department, a panel of US legislators has advised.

The House of Representatives Energy and Commerce Committee says it has obtained evidence which casts doubt on the explanations it received from Ms Stewart.

This evidence raises a serious question as to whether Ms Stewart's accounts were false, misleading and designed to conceal material facts

Billy Tauzin US House of Representatives

Justice, it said, should look into it further, to see whether she broke the Federal False Statements Act - an infraction that carries a maximum five-year jail term.

Ms Stewart is accused of using inside information to guide her sale of 4,000 shares of biotech firm ImClone on 27 December 2001 - just one day before the company's key cancer treatment was thrown out by regulators, sending the share price through the floor.

On the markets

The committee's announcement - which included an acknowledgement that there was no "smoking gun" - drew a sharp response from Ms Stewart's lawyers.

"I strongly disagree with the analysis of the committee and its staff, but am pleased that the matter will now be exclusively in the hands of professional law enforcement authorities who are trained to conduct a responsible and thorough investigation," said one, Robert Morvillo, in a statement.

Ms Stewart denies any wrong-doing

"I am glad that the political aspects of this matter will now terminate and am confident that the investigation will lead to Ms Stewart's exoneration."

The outcome did little harm to Omnipedia, the company at the heart of her stranglehold on American domestic manners.

The company's shares ended the day up nearly 17% at $9.05.

ImClone shares, in contrast, gained just 2.5% to $8.20 - a far cry from the high of above $70 in late 2001.

Ms Stewart's own explanation for her decision to sell up was the biotech's stock price then started drifting lower, and she had already arranged with her broker to sell once the price slipped below $60.

That happened on 26 December, the day before she offloaded the holding.

Different stories

Not that she had told the committee so in person; despite long negotiations, Ms Stewart refused to testify herself, and instead her lawyers provided e-mails, telephone and other records.

Martha's millions Revenues, $m

1997: 133 1998: 180 1999: 232 2000: 286 2001: 296

A trading assistant at Merrill Lynch has contradicted her explanation.

As a result, her version of events met with little sympathy from the committee's chairman, Louisiana Democrat Billy Tauzin.

"This evidence raises a serious question as to whether Ms Stewart's accounts were false, misleading and designed to conceal material facts," he told reporters at a news conference on Capitol Hill.

The committee's investigation into ImClone, he said, would continue.

The company's former chief executive, Sam Waksal has been charged with tipping off two relatives about the negative report from the Food and Drug Administration, as well as selling shares himself on the information.

A word from Mr Waksal is also alleged to be the cause of Ms Stewart's decision to sell. The two are friends of long standing.