Closing Bell

In June, the same month that Martha Stewart gained a seat on the board of the New York Stock Exchange, news broke that she may have made an illegal insider-trading sale of her shares of ImClone stock. On Thursday, a day after her broker's assistant pleaded guilty on misdemeanor charges related to that sale, Stewart stepped down from the NYSE post she had held for just four months. ''I did not want the media attention currently surrounding me to distract from the important work of the NYSE, and thus I felt it was appropriate to resign,'' she said in a statement.

On Wednesday, Douglas Faneuil pleaded guilty to charges of blackmail, saying he had spread a false cover story for Stewart in return for such favors as airline tickets. (He had also reportedly been offered New York Knicks tickets, but his plea did not mention whether he had accepted them.) Faneuil had initially echoed the explanation put forth by Stewart and his boss, Merrill Lynch broker Peter Bacanovic, that Stewart's trade had been the result of a standing order to sell her ImClone shares if they dipped below $60, but Faneuil now says there was no such order, implying that Stewart sold early based on insider knowledge fed to her by Bacanovic that ImClone founder and Stewart pal Sam Waksal was unloading his shares. ImClone's price was about to drop because its new cancer drug had failed to meet federal approval.

Stewart has yet to be charged with a crime for the December sale, but Faneuil's testimony suggests that a charge is imminent. Despite her explanation for her NYSE resignation, some Wall Streeters believe she was pressured to step down. Charles Berents, chief investment officer at North American Management Corp., which owns about 20,000 shares of Martha Stewart Living, told Reuters, ''She's tainted.[NYSE Chairman Richard] Grasso wants to be cleaner than God, so she's got to be tossed overboard.''

For his part, Grasso said at a NYSE board meeting Thursday, ''We are saddened to lose Martha Stewart, who has built a brand and a company admired around the word. Our board will miss Ms. Stewart's counsel and insight.'' Maybe she can still offer counsel and insight to all the other indicted or soon-to-be-indicted CEOs, giving them advice on how to decorate their cells.

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