By Stephen M. Silverman
Updated October 03, 2002 10:25 AM
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Martha Stewart, under investigation by the Justice Department for possible insider trading when it came to her sale of ImClone stock, resigned Thursday from the board of the New York Stock Exchange, board officials said.

“We are saddened to lose Martha Stewart, who has built a brand and a company admired around the world,” said Dick Grasso, chairman and CEO of the exchange, according to the Associated Press. “Our board will miss Ms. Stewart’s counsel and insight.”

Neither a spokeswoman for Stewart nor a spokeswoman for her company, Martha Stewart Living Omnimedia Inc., had comment.

Stewart, 60, had joined the NYSE’s 27-member board of directors in June 2002. Her term was set to expire next year.

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 highly touted new cancer drug, Erbitux.

Both Faneuil and his boss, Stewart’s stockbroker Peter Bacanovic, were fired from Merrill Lynch on Wednesday, after Faneuil entered his plea, NBC News reports.

Stewart, who has denied any wrongdoing, has said all along that she had a standing order with her stockbroker to dump the ImClone shares if they were to fall below $60. Faneuil, 26, initially told the same story to investigators but later changed his account, admitting that there had been no such order.

Thursday’s announcement helped send shares of Martha Stewart Living Omnimedia downward. In afternoon trading, the stock fell 67 cents, or 10 percent, to $6.13 a share on the NYSE. The shares have slipped more than 60 percent since news of the Stewart-ImClone situation first broke in June.