NEW YORK (CNNMoney.com) - A federal appeals court Friday upheld the conviction of celebrity style setter Martha Stewart for lying about a stock sale.

In 2004, Stewart was convicted on charges of conspiracy, obstruction of justice and making false statements and her former Merrill Lynch stockbroker, Peter Bacanovic, was convicted on four of five counts against him.

An appeals court upheld Stewart's conviction for lying about a stock sale.

Shares of Martha Stewart Living Omnimedia have lost almost 40 percent in the last year.

The verdict on Martha A federal appeals court just upheld Martha Stewart's legal challenge to her conviction. Read the documents US v. Stewart, Bacanovic (PDF) Superseding Indictment

Stewart served five months in prison and near six months of house arrest starting in October 2004.

The charges stemmed from Stewart's sale of almost 4,000 shares of ImClone Systems stock in late 2001, just before the shares tumbled following a negative FDA ruling about the cancer drug Erbitux, which was later approved for use against colon cancer.

Stewart was released from house arrest last August.

The decision by the U.S. Court of Appeals for the Second Circuit in New York affirms that her conviction will not be overturned. But the court also ruled that Bacanovic's sentence could be reviewed.

"We conclude that none of the numerous grounds upon which defendants challenge their convictions provides a basis to disturb the jury's verdict and, therefore, we affirm the judgments of the District Court, and remand the case solely for consideration of whether to modify Bacanovic's sentence," the appellate court said in its ruling.

The upholding of the conviction could impact Stewart's business career and keep her from returning to the helm of the company she founded Martha Stewart Living Omnimedia (Research).

There is no SEC rule stating that convicted felons may not be officers of public companies. But most publicly traded companies aren't likely to let a felon head the company, according to Solomon Wisenberg, a white collar criminal defense lawyer in Washington.

Martha Stewart Living Omnimedia has suffered since Stewart was convicted in a case that gripped public attention. Shares of the company have tumbled nearly 40 percent in the last year.

In its most recent challenge, the company said James Follo, its chief financial and administrative officer, plans to resign in March.

Wisenberg said the ruling on Stewart's appeal was not surprising, since it is difficult to overturn convictions for lying to the government.

Stewart could appeal her case to the Supreme Court, but it's extremely unlikely that such an appeal would be granted because "there are no earth-shaking issues other than the fact that she's Martha Stewart," he said.

Stewart's lawyers could not immediately be reached for comment.

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