The Securities and Exchange Commission will be recommending civil fraud charges against Martha Stewart.

"SEC investigators have notified Martha Stewart that they plan to recommend civil securities fraud charges against her in connection with her sale of ImClone Systems Inc. shares, according to media reports Monday."

While the penalty would involve a fine and not jail, there is no assurance prosecutors won't bring criminal charges against her either now or later. If both criminal and civil charges are filed against her, it will be trickier for her lawyers to develop a defense, as they will need to negotiate and/or defend against the civil charges without saying or admitting anything that could be used against her criminally. A global settlement of the civil charges and any potential criminal charges, whereby both are settled at the same time, may be her lawyers' strategy.

Typically, the SEC first sends a "Wells Notice" to the target of the investigation, informing them of their right to appear before the Commission and explain their actions. These notices usually are followed by the filing of civil charges.

Stewart's control over her companies faces an uncertain future as well. If convicted of the civil charges, the SEC might ban her from acting as an officer or director of a publicly traded company.