Stewart Resigns From NYSE BoardOct 3, 2002 | UPI
Amid a federal investigation for insider trading, lifestyle entrepreneur Martha Stewart resigned Thursday from the New York Stock Exchange's board of directors, the NYSE said.
The resignation of Stewart, the head of a media empire, comes just a day after her Merrill Lynch broker's assistant accepted a plea bargain deal to testify against Stewart and as part of the ongoing investigation into the December sale of biotech company ImClone's stock.
"We are saddened to lose Martha Stewart, who has built a brand and a company admired around the world," said Dick Grasso, NYSE chairman and chief executive officer. "Our board will miss Ms. Stewart's counsel and insight, and expressed its deep gratitude for her service."
Stewart tendered her resignation in a letter, saying that she was resigning due to the "rigors of my busy corporate life," according to Grasso.
She joined the NYSE board this past June.
The chief executive of Martha Stewart Living Omnimedia, Stewart is suspected of having taken improper advantage of her Wall Street connections.
She sold nearly 4,000 shares of biotech company ImClone Systems Inc. on Dec. 27, supposedly on her broker's advice. The next day, the company announced the rejection of its application with the U.S. Food and Drug Administration for its cancer drug, Erbitux.
The announcement sent ImClone shares tumbling, but not before Stewart made a profit as opposed to a potential $40,000 loss.
Investigators and critics of Stewart have argued that she is a friend of ImClone's former chief executive, Sam Waksal, and was able to profit from inside information a violation of securities laws.
Waksal is under investigation for selling ImClone shares before the FDA ruling became public.
Stewart has denied any wrongdoing and has stated that she had a standing order with her broker to sell her ImClone shares if they fell below $60.
Douglas Faneuil, formerly the assistant to Stewart's Merrill stockbroker, Peter Bacanovic, admitted Wednesday to receiving compensation "as consideration for not informing" investigators about having allegedly given inside information to Stewart about ImClone. Both were fired by Merrill Lynch on Wednesday.
Since allegations of Stewart's wrongdoing surfaced, shares of Martha Stewart Living Omnimedia a network of publishing, retailing and TV activities are down by more than half.