Stewart, the celebrity trend-setter and founder of Martha Stewart Living Omnimedia (MSO), served five months in prison for her March 2004 conviction and since has resumed her television career.
She went to jail proclaiming her innocence but said she wanted to get the ordeal over with and would continue to appeal the conviction.
A jury found her and Bacanovic guilty of conspiracy, making false statements and obstruction of justice for lying about a suspicious stock trade. The jury also found Bacanovic guilty of perjury.
Both were sentenced to five months in jail followed by a two-year period of supervised release, five months of which were to be served in home confinement. Stewart and Bacanovic were ordered to pay fines of $30,000 and $4,000 respectively.
"We conclude that none of the numerous grounds upon which defendants challenge their convictions provides a basis to disturb the jury's verdict and ... remand the case solely for consideration of whether to modify Bacanovic's sentence," Judge Peter Hall wrote on behalf of the Second Circuit Court of Appeals.
Bacanovic also served his prison time but is still under court supervision.