A federal judge has dismissed the most serious charge against Ms Martha Stewart just days before she is due to stand trial for a securities fraud.
The charge accused Ms Stewart of deceiving investors in her company, Martha Stewart Living Omnimedia, by lying about her sale of ImClone Systems stock.
If convicted Ms Stewart would have faced 10 years in prison. Four other conspiracy and obstruction of justice charges are still pending before US District Judge Miriam Goldman Cedarbaum. They carry sentences of up to five years each.
The judge also declined to throw out any of the five charges against Ms Stewart's former stockbroker, Mr Peter Bacanovic.
The US government offered evidence at the trial in a Manhattan federal court that Martha Stewart Living shares rose after Ms Stewart told investors she had a pre-existing agreement to sell her ImClone shares once they fell below $60.
Ms Stewart and Mr Bacanovic, who worked with Merrill Lynch & Co., are also accused of conspiring to deceive investigators about the reason for her ImClone stock sale.
The trade occurred a day before federal regulators denied an application for an ImClone cancer drug.
