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What Goes Up

On October 20, 1999, domesticity diva Martha Stewart rang Wall Street's opening bell (this after serving brioche and orange juice to floor traders) and saw shares of her newly public Martha Stewart Living Omnimedia (MSO) trading at $37.25 – more than double what underwriters were expecting – giving her a personal net worth of $1.27 billion.

On the day of her company's IPO, Stewart attended lunch at the Manhattan home of magazine editor Tina Brown. According to the 2002 biography Martha Inc., when Brown asked how she was doing, Stewart answered, "I'm rich."

But as gains from the IPO dissipated (in retrospect, the autumn of 1999 marked the absolute peak of the greatest bull market in American history), MSO and its embattled leader faced increased pressure as partner Kmart Corp. filed for bankruptcy protection in the wake of a wretched 2001 holiday retail season. However, these worries were all but forgotten when charges of insider trading were brought against Stewart in early 2002.

Busted

It appeared that Sam Waksal, CEO and founder of the biopharmaceutical company ImClone, had warned Stewart that the Food and Drug Administration was going to spike the company's application for approval of its highly touted cancer drug, Erbitux. A former stockbroker and member of the NYSE Board of Governors, Stewart was immediately viewed as being complicit in the unfolding scandal, having dumped 3,928 shares of ImClone to avoid a loss of $45,673.

Amid the ensuing media circus, Stewart went to trial, wherein she argued that the sale was based on a prearranged agreement with her stockbroker. While dodging the most serious charge of securities fraud, she was convicted in March 2004 on four counts of lying to investigators and obstruction of justice.

Without ever admitting guilt, Stewart agreed to the maximum penalty of $195,000 as well as a five-year ban from serving as director of a public company and a five-month stint in prison.

The Comeback

Following her March 2005 release, the comeback of Martha Stewart has enjoyed more hits than misses. While her primetime debut on "The Apprentice: Martha Stewart" was cancelled after one season, the "Martha Stewart Everyday" line of interior paints continues to see strong sales while her business advice book, "The Martha Rules" was a New York Times bestseller.

More recently, Stewart, 65, has courted a gentler form of controversy by revealing in January of 2007 that she planned to license her town's name of Katonah for use in various business ventures. While the use of place names in trademarks is not uncommon – Philadelphia Cream Cheese is one example – the Katonah Village Improvement Society is undertaking measures to block her efforts, on behalf of dozens of small businesses located in the affluent New York hamlet.

Shares of MSO, meanwhile, are currently trading at $18 – exactly the price underwriters were expecting the day Stewart rang Wall Street's opening bell.