“A Merrill Lynch & Co. brokerage assistant is scheduled to plead guilty Wednesday to a misdemeanor charge and provide testimony to federal prosecutors against Martha Stewart and others in connection with their sales of ImClone Systems Inc. stock late last year, a person close to the matter said,” according to a story in today’s Wall Street Journal.

“The plea agreement by Douglas Faneuil marks a crucial step in the investigation into the trading of ImClone shares, which has ensnarled the company’s former chief executive, Samuel Waksal, and Ms. Stewart. It also indicates prosecutors could be moving closer to filing charges against her.”

“Mr. Faneuil is expected to appear in federal court in Manhattan to formally enter his plea, this person says. Marvin Pickholz, Mr. Faneuil’s attorney who negotiated the agreement, declined to comment. A spokesman for the U.S. Attorney’s office had no comment.”

“Mr. Faneuil has emerged as an important witness in the government’s inquiry into Ms. Stewart’s ImClone sale. As an assistant to Peter Bacanovic, Ms. Stewart’s Merrill broker, Mr. Faneuil initially supported Ms. Stewart’s version of events: that she had a previously arranged stop-loss agreement with her broker to sell the stock if the shares fell below $60 each. He later changed his story, saying he was pressured to lie to federal investigators.”

“As part of the deal, the Manhattan U.S. attorney’s office plans to file a misdemeanor charge against Mr. Faneuil, 26 years old, involving the acceptance of a gift from Mr. Bacanovic in exchange for corroborating the account about the stop-loss order, the person said.”

“Mr. Faneuil is on paid administrative leave from Merrill, but people close to the company say, under Merrill policy, he may be forced to resign from the firm when he reaches the plea agreement.”