A New York Stock Exchange internal enquiry has found that former Chairman Richard Grasso’s compensation was too much. How “too much?” Around $150 million. “Serious damage has been inflicted on the exchange by unreasonable compensation,” an NYSE statement said. “We’re going after Grasso, and hopefully the board members who were responsible for this modern-day version of the Great Train Robbery,” said John Jakobson, an NYSE member who leases his seat.

New York State Attorney General Eliot Spitzer and the U.S. Securities and Exchange Commission agreed to a request from interim NYSE Chairman John Reed and his board to determine whether the payments violated state or federal law.

The NYSE, the world’s biggest floor-based exchange, is a not-for-profit company owned by 1,367 members.

Grasso, 57, was ousted in September after he received a $140 million payout and said he turned down another $48 million. The disclosures sparked criticism that his compensation, set by heads of firms he helped police, compromised the exchange’s role as a regulator. The NYSE also named Richard Ketchum, former president of the Nasdaq Stock Market, to replace Edward Kwalwasser to run its regulatory unit.

Webb Report

A report commissioned by Reed and conducted by former federal prosecutor Dan Webb found that there Grasso got “substantial overcompensation” – in his annual pay and retirement and pension benefits — between 1995 and 2003, a person familiar with the report said.

The “overcompensation” was between $100 million and $150 million, the report concluded.

Spitzer said in an interview in Washington that he has an “open mind” on Grasso’s pay. He said he reacted “viscerally” when he first heard the size of the pay package. In public appearances earlier this year, Grasso and Spitzer referred to each other as “my good friend.”

Spitzer also said his office and the SEC will be “working hand in glove” on the investigation. An SEC statement said the agency has begun a probe of the payout to Grasso.

The attorney general’s authority to pursue Grasso stems from provisions of the state’s not-for-profit corporation laws. The NYSE is a not-for-profit company. The SEC has authority because it oversees U.S. exchanges.

NYSE spokesman Ray Pellecchia declined to elaborate on the statement. Grasso’s lawyer, Kenneth Edgar, a partner at Simpson Thacher & Bartlett, didn’t return calls for comment.

`Embarrassing’

NYSE members and pension fund executives want Reed to release Webb’s report, an analysis of which board members, exchange officials and outside advisers may have been complicit in overpaying Grasso.

The report is “embarrassing,” Reed told reporters last month, saying he would prefer to withhold it from the public.