Martha Stewart, under investigation by the Justice Department over her sale of ImClone stock, resigned Thursday from the board of the New York Stock Exchange as questions begin to arise about whether she will also resign from her position as CEO of Martha Stewart Living Omnimedia Inc.
Stewart, 60, had joined the NYSE's 27-member board of directors in June 2002. Her term was set to expire next year.
In a statement, Stewart said she quit because she did not want "media attention currently surrounding me to distract from the important work of the NYSE."
Stewart's resignation came one day after Douglas Faneuil, an assistant to Stewart's stockbroker at Merrill Lynch, pleaded guilty to a misdemeanor charge that he was paid off to stay mum about an insider stock tip allegedly given to the domestic diva.
Last December, Stewart unloaded nearly 4,000 shares of ImClone stock just before the biotech company's stock price plunged because the Food and Drug Administration would not approve its new cancer drug. She claimed that she had a standing order with her broker to sell the shares should they go below $60 and insists there was never anything unlawful about the transaction.
Even so, Stewart's resignation, as analyzed by Columbia University Law School professor John Coffee, is seen as a sign that "she finally realized the walls are closing in," reports Friday's New York Times. Discussing the possibility of Stewart having to leave her own company, Coffee said, "There obviously has to be a discussion going on in her own board -- every other CEO who has been indicted has resigned."
T.K. MacKay, an analyst covering Stewart's company stock for the Chicago-based Morningstar research firm, told the Times, "The stock should be avoided. We have seen evidence that her disintegrating reputation is taking a toll on the company's business."
On Thursday, after she announced her resignation from the NYSE board, Stewart's stock fell, closing down more than 8 percent, to $6.21, its lowest price ever.
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