NEW YORK (CNN/Money) - Martha Stewart's assistant testified Tuesday that the home decor expert personally changed a Dec. 27, 2001, phone message from her broker telling her that ImClone Systems stock would start falling, but then changed the message back.

Stewart's assistant, Ann Armstrong, provides damaging testimony against Martha. CNNfn's Allan Chernoff reports. Play video (Real or Windows Media)

Ann Armstrong, who broke down in tears Monday as she started testifying against her longtime boss, showed more composure in her second day of testimony Tuesday at the obstruction of justice trial of Stewart and Peter Bacanovic, Stewart's former Merrill Lynch broker.

Armstrong testified that Stewart went to Armstrong's computer terminal on Jan. 31, 2002 and asked to see the phone messages for Dec. 27, the day of Stewart's now well-known sale of nearly 4,000 shares of ImClone.

"She highlighted from the end of Peter's name and then she started typing over that," Armstrong testified in response to questions from a government prosecutor. The assistant said Stewart typed "re: ImClone" in place of the message.

Shortly afterward, however, Stewart ordered Armstrong to change the message back to the original one and then to call Stewart's son-in-law, who is a lawyer, Armstrong testified.

Findlaw documents Stewart's message log

Armstrong said she had never seen Stewart alter a phone message prior to that day.

Federal prosecutors hope Armstrong's statements will show that Stewart sought to cover up details about her ImClone stock trade.

Meanwhile, Helene Glotzer, an assistant regional director at the SEC, took the stand after Armstrong to testify about the SEC's initial interview with Stewart on Feb. 4, 2002.

Glotzer said she questioned Stewart about her stock sale on Dec. 27, 2001, asking Stewart if she recalled making a call to Bacanovic's office.

The SEC investigator testified that Stewart said she did make a call to the broker's office and Bacanovic was the one she had spoken with on the phone. Stewart said at that time that the name of Bacanovic's assistant Douglas Faneuil did not ring a bell; a remark that raises questions about Stewart's version of her stock sale.

When asked about the telephone message during the February interview, Stewart said she did not know whether the phone message from Bacanovic had been recorded in the computerized log, according to Glotzer's testimony.

Stewart said she may have told Mariana Pasternak, a friend of Stewart and a key government witness, about her stock sale and she may have also told Kevin Sharkey, an employee at Martha Stewart Living, Glotzer told the court.

Stewart and Bacanovic are accused of lying to cover up the reason for Stewart's ImClone sale, which the government contends was an inside tip -- passed from Bacanovic through his assistant to Stewart -- that ImClone founder Sam Waksal was trying to sell that day.

Stewart and Bacanovic say they had a long-standing pact to sell ImClone stock if the shares fell below $60.

Armstrong said Tuesday that after Martha spoke with her son-in-law, he later called Armstrong to talk with her directly and they discussed what the secretary should do with the message.

Related Links • Stewart's Employment Agreement at Martha Stewart Living Omnimedia Inc. • Court Ruling Dismissing 'Selective Prosecution' Defense • Superseding Indictment (U.S. v. Stewart and Bacanovic)

On Monday, Armstrong said that when she spoke with Stewart on Dec. 27, 2001, it was the first time she'd spoken to her boss since Christmas and that she thanked Stewart for her Christmas gift, a plum pudding. Armstrong then broke down crying on the stand and tried to compose herself.

"I gave her the messages," she said. "There weren't many that day."

Armstrong then tried to continue, but broke down again, and the judge recessed the trial until Tuesday.

Armstrong had testified a few minutes earlier Monday that Bacanovic's message for Stewart that day read, in part: "He thought ImClone was going to start trading downward."

The dramatic moment came not long after Faneuil, the government's star witness, ended his testimony in the obstruction of justice trial. Faneuil has pleaded guilty to a misdemeanor for his part in the scheme and agreed to testify about Stewart's sale, and much of the government's case will hinge on whether jurors believe him.

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Earlier Monday, Stewart's lawyer took aim at Faneuil by asking him how he could so clearly recall a conversation that occurred more than two years ago. Faneuil insisted he could recall their exchange precisely.

"I don't remember every word exactly, but for the most part, I believe I remember it word for word," the former assistant testified.

Over four days on the witness stand Faneuil has told jurors repeatedly that he gave Stewart the tip that Waksal and members of his family were trying to sell.

But Monday he conceded that he never discussed a cover-up with Stewart and she never encouraged him to lie about their conversation.

"You were never asked by Martha Stewart to commit a crime, were you?'' asked Robert Morvillo, Stewart's attorney and a respected veteran white collar defense lawyer, according to Reuters.

Faneuil admitted that Stewart never spoke to him about covering up the stock tip.

Stewart, the lifestyle expert who founded Martha Stewart Living Omnimedia (MSO: Research, Estimates), faces up to 30 years in prison while Bacanovic could be sentenced to 25 years if convicted on all counts, according to the U.S. Attorney's office.

Waksal is serving a seven-year prison term after pleading guilty to charges of trying to sell ImClone (IMCL: Research, Estimates) stock a day before a negative announcement started ImClone shares tumbling.  

-- with CNNfn's Kelly Marshall and staff and wire reports