Homemaking diva Martha Stewart will pay about $195,000 and cannot serve as the director of a public company for five years under a settlement announced yesterday.

In accord with the settlement, the founder of Martha Stewart Living Omnimedia Inc.,a multimedia empire dedicated to stylish living, agreed to make a payment relating to losses the government said she avoided on her sale of ImClone Systems Inc. stock in December 2001.

Stewart agreed to pay $45,673, the amount of losses she avoided from her insider trading, plus $12,389 in interest. But the bulk of the payment comes from the maximum civil penalty of $137,019, three times the amount of losses avoided.

In addition to accepting a five-year ban on being a company director, Stewart agreed to limits for five years on her service as an officer or employee of a public company. During that period, she will be prohibited from participating in financial reporting and disclosure, internal controls, audits, Securities and Exchange Commission filings, and monitoring compliance with the federal securities laws.

The terms go into effect on the date the court ratifies the settlement.

Her broker, Peter Bacanovic, agreed to pay a penalty totaling about $75,000, the SEC said yesterday. In a previous order, the SEC barred Bacanovic, who is a former Merrill Lynch employee, from associating with a broker, dealer, or investment adviser.

In settling the charges, Stewart and Bacanovic neither admitted nor denied the allegations in the SEC complaint.

“This brings closure to a personal matter, and my personal nightmare has come to an end,” Stewart said in a statement.

In March 2005, Stewart completed a five-month prison term for lying to federal investigators about why she made the stock sale. She was convicted of the criminal charge in June 2004.

“This case sends a strong message that the commission will not tolerate insider trading, especially where brokers tip their clients with confidential information that insiders of companies are selling their stock,” the assistant regional director for the SEC’s Northeast Regional Office in New York, Bruce Karpati, said.

Stewart sold ImClone shares a day before the Food and Drug Administration announced it had declined to review ImClone’s application for its cancer drug Erbitux. The stock fell about 16% in the wake of that FDA announcement. Her defense was that she had an agreement with her broker to sell ImClone shares when it fell to $60 a share.

A spokeswoman at Martha Stewart Living, Elizabeth Estroff, said in a statement yesterday that the company “is very happy that the SEC action has been resolved.”

“The settlement allows Martha to continue in her role as founder and as the creative force behind the brand,” Ms. Estroff added.” With her strategic vision in design and style, as well as in expanding our business opportunities, she is a tremendous asset to this company.”

Stewart’s personal legal woes date back to June 2002, when news surfaced of Stewart’s questionable sale of ImClone stock.

The SEC had filed the complaint charging Stewart with insider trading the same day she was indicted on June 4, 2003, on criminal charges. But the SEC stayed the complaint, only lifting it in April after criminal appeals were exhausted. A federal appeals court upheld both Stewart’s and Bacanovic’s convictions in January.

Initially, Stewart sought to fight the SEC charges, filing an 11-page response to the SEC complaint in May, defending that she “acted in good faith.”

In settling the case with the SEC, Stewart avoids yet another public trial, which some analysts say could have stalled a turnaround that the company has made over the last year. Many analysts have maintained that it was in Stewart’s interest to settle the charges since she will still be able to wield considerable influence over her multimedia empire.

Martha Stewart Living shares rose 22 cents to $17.10 in afternoon trading on the New York Stock Exchange.