New York ? The stock of Martha Stewart’s media empire fell sharply Thursday after a published report said an assistant at Merrill Lynch has agreed to testify against her in the ImClone insider-trading case.

Prosecutors had sought to charge the assistant, Douglas Faneuil, with a felony of making false statements to investigators but agreed to a misdemeanor charge in exchange for his cooperation, The Wall Street Journal said, citing unidentified sources.

The charge is expected to be filed within days, the newspaper reported.

Martha Stewart Living Omnimedia declined 7.7 percent, or 60 cents a share, to close at $7.20 on the New York Stock Exchange.

A spokesperson for Stewart also declined to comment Thursday, but in the past she has denied wrongdoing.

Merrill Lynch handled Stewart’s sale of nearly 4,000 ImClone shares in late December, shortly before the pharmaceutical company announced that federal regulators would not review the company’s cancer drug, Erbitux.