Martha Stewart resigns from stock exchange board

NEW YORK -- Martha Stewart, under federal investigation on suspicion of insider trading, resigned Thursday from the board of directors of the New York Stock Exchange.

"I did not want the media attention currently surrounding me to distract from the important work of the NYSE and thus felt it was appropriate to resign," Stewart said in a statement Thursday. Earlier in the day, she sent a letter of resignation to NYSE chairman and chief executive Dick Grasso before the exchange's board meeting.

The Justice Department is investigating Stewart's sale of nearly 4,000 shares of ImClone Systems just before the stock plummeted last December on bad news about the company's highly touted cancer drug. She has denied any wrongdoing.

A day earlier, an assistant to Stewart's stockbroker pleaded guilty to accepting money and other valuables to keep quiet about the sale. The assistant has agreed to testify against others.

Stewart, who was a stockbroker before launching her own business, was one of 27 NYSE board members. Her term was to expire next year.

The news further hurt Martha Stewart Living Omnimedia. The stock closed down 59 cents, or nearly 9 percent, at $6.21 a share on the NYSE. It has fallen more than 60 percent since Stewart's alleged connection to the ImClone scandal was first reported in June.

Grasso said Stewart's decision was voluntary.

"We are saddened to lose Martha Stewart, who has built a brand and a company admired around the word," he said. "Our board will miss Ms. Stewart's counsel and insight."

Stewart dumped her ImClone stock just before the news broke that the Food and Drug Administration would not review the company's application for the drug Erbitux.

Stewart has said she had a standing order to sell the stock if it fell below $60. Her stockbroker's assistant, Douglas Faneuil, initially gave investigators the same account but later said there had been no such order.

Former ImClone chief executive Sam Waksal, a friend of Stewart's, has pleaded innocent to telling friends and relatives to dump millions in ImClone stock before the bad news about Erbitux became public.