Updated from 3:07 p.m. EDT

Martha Stewart resigned from the board of the

New York Stock Exchange

Thursday, a day after prosecutors in the

ImClone

(IMCL)

insider-trading scandal produced possible evidence against her.

Michael Carpenter, who was ousted last month as head of

Citigroup's

(C) - Get Report

Salomon Smith Barney, also stepped down from the board. Citigroup is under investigation for conflicts of interest between its banking and research departments.

The board positions vacated by Stewart and Carpenter will not be filled until at least December, the NYSE said, when a nominating committee will submit new names for consideration.

Other contentious members still seated on the NYSE board include David Komansky, the CEO of

Merrill Lynch

(MER)

, which paid $100 million to resolve conflict-of-interest issues in May. Merrill is also wrapped up in the Enron investigation. There is also John-Marie Messier, the former CEO of

Vivendi Universal

(V) - Get Report

, who resigned under pressure from his own board of directors.

Meanwhile, investigators are trying to find out whether Stewart had inside information when she sold ImClone stock, a day before a negative ruling on the firm's cancer drug Erbitux. She has repeatedly denied any wrongdoing. Sam Waksal, the former CEO of ImClone, has pleaded innocent to insider trading charges. Stewart's resignation, though voluntary, indicates the seriousness of her circumstances, legal experts said.

"It is clear now that this is a more significant situation," said Jeff Brotman, a law professor at the University of Pennsylvania. "There is a likelihood charges could be brought against her or implicate her."

On Wednesday, Douglas Faneuil, the assistant to Stewart's

Merrill Lynch

(MER)

stockbroker, admitted to accepting bribes from his boss, Peter Bacanovic, for backing up his story about Stewart's controversial stock sale.

Faneuil initially had adhered to broker Bacanovic's story that Stewart had a prearranged stop-loss order to sell her roughly 4,000 ImClone shares when they fell below $60 each. But Faneuil pleaded guilty to federal misdemeanor charges on Wednesday for lying about the story. Merrill Lynch fired Faneuil and Bacanovic, who had been on paid leave since June, on Wednesday.

The Faneuil plea adds a layer of evidence that could help prosecutors build a case against her. "Now, you have someone saying something that, if true, could implicate Martha Stewart," said law professor Brotman.

As questions swirled about Stewart's position on the NYSE board, Dick Grasso, chairman and chief executive of the NYSE, defended her.

"Ms. Stewart has both publicly and privately asserted her innocence. This is still America, innocent until proven guilty," he said in an appearance on ABC's "This Week" in July. "If, in fact, the circumstances change, obviously she knows she has an obligation to this board ... to do the right thing."

Grasso said in a statement Thursday, "We are saddened to lose Martha Stewart, who has built a brand and a company admired around the world ... Our board will miss Ms. Stewart's counsel and insight, and expressed its deep gratitude for her service." In a resignation letter, Stewart thanked Grasso for his support.

Shares of

Martha Stewart Living Omnimedia

(MSO)

, down more than 70% since reports of a congressional investigation into her stock sale surfaced on June, lost 59 cents, or 8.7%, to $6.21 on Thursday.