Wrongly interpret popular writer's pen-name, omitting 's' (7)
I believe the answer is:
misread
'wrongly interpret' is the definition.
'popular writer's pen-name omitting s' is the wordplay.
'popular writer's pen-name' becomes 'missread' (pseudonym of Dora Jessie Saint).
'omitting' is a deletion indicator.
'missread' with 's' taken away is 'MISREAD'.
(Other definitions for misread that I've seen before include "wrongly interpreted" , "Take the wrong way" .)