By Erin McClam-
The Associated Press

NEW YORK - Martha Stewart sold stock based on "a secret tip" no one else had, then lied to save her reputation and fortune, a federal prosecutor told a jury Tuesday.

Stewart's lawyer insisted that the case was based on "speculation, surmise and guesswork."

The jury of eight women and four men listened to three hours of opening statements that outlined starkly different portrayals of Stewart's sale of almost 4,000 shares in the biotechnology company ImClone Systems on Dec. 27, 2001.

The government contends that Stewart was tipped that ImClone founder Sam Waksal was trying to dump his shares, then ordered her shares sold.

Assistant U.S. Attorney Karen Patton Seymour said Stewart then conspired with her stockbroker, Peter Bacanovic, to lie about the sale.

"The reason that Martha Stewart dumped her shares is because she was told a secret," Seymour said. "A secret tip that no other investors in ImClone had."

Lawyers for Stewart and Bacanovic aimed to convince jurors that the two defendants had done nothing out of the ordinary, arguing that they had decided six days before the ImClone sale to get rid of the stock if it fell to $60.

Waksal later admitted that he was tipped that federal regulators were about to issue a negative report on ImClone's only drug, the cancer treatment Erbitux. That report sent the stock plummeting. Waksal later pleaded guilty to securities fraud.