Former New York Stock Exchange head Richard Grasso filed suit against the NYSE and the chairman who replaced him, ramping up his defense in a suit that demands he repay part of a $188.5 million pay package.
The suit alleges that the NYSE breached its contract with Grasso by terminating him and then failing to pay all of his compensation. He is seeking at least $50 million, according to a filing made in federal court in New York.
Grasso also claims that the NYSE breached a clause to not disparage him when John Reed, the chairman who replaced Grasso, criticized his management to the press.
That claim could lead him to seek millions of dollars more from the NYSE, said legal experts. Grasso suffered “substantial and irreparable damages, including such consequential damages as the loss of future potential employment,” according to the filing.
Grasso is also suing Reed, who was brought in to help rebuild confidence in the NYSE after Grasso was forced out last September, for defamation.
The suit provides an early look at the challenge Grasso is mounting against New York Attorney General Eliot Spitzer’s office, which claims that Grasso’s pay package was excessive under New York’s not-for-profit laws.
Spitzer sued Grasso in state court in May, seeking the return of at least $100 million.
While the counter-attack on Grasso’s former employer was widely expected, Grasso’s effort last month to move the case from state to federal court was not anticipated and seen as a novel approach, said legal experts. Spitzer’s office rebutted the attempt to change the venue in a brief filed on Monday.
“When you decide to fight, it is not necessarily gentleman’s conduct; you come out with all available tools in your arsenal,” said Michael Zuppone, a partner at New York law firm Paul, Hastings, Janofsky & Walker LLP and former Securities and Exchange Commission official.
Grasso’s suit, which contained an answer to Spitzer’s original action, also claims that an investigation made by former U.S. prosecutor Daniel Webb and commissioned by the NYSE did not implicate Grasso in any wrongdoing. The NYSE has not made the Webb report public.