Eliot Spitzer is on a sharp trajectory to higher office. The Grasso case could mean some nasty turbulence

Eliot Spitzer’s political future seems to grow brighter every day. The New York attorney general has earned a rep as a tough regulator of white-collar fraud with his crackdown on Wall Street stock research and mutual funds. Many political pros say he’s a shoo-in for the Democratic nomination for governor of New York in 2006, and polls show he’s a hit with many Republicans as well. He’s sure to draw a crowd for his double-duty fund-raiser and 45th-birthday party at the ESPN Zone in Times Square next week (invitations show a photo illustration of a beaming Spitzer in a baseball uniform, swinging a flaming bat).

Conventional wisdom holds that Spitzer’s latest salvo against former New York Stock Exchange chairman Richard Grasso—to recoup a chunk of Grasso’s disputed $139.5 million pay package-will earn him even more points. “The public is irate over excessive compensation,” says Jacob Zamansky, a lawyer who represents investors. But conventional wisdom may be wrong. Grasso has launched a spirited attack on Spitzer’s motives, portraying himself as a victim of an ambitious pol. He’s seized on the fact that Spitzer didn’t name New York state Democratic Party heavyweight H. Carl McCall, the head of the stock exchange’s compensation committee who approved Grasso’s pay deal, in his civil suit filed last week.

What’s more, Spitzer and Grasso have a history, much of it good, which Grasso is likely to draw on in court. Grasso was one of the first to laud Spitzer for his attack on research abuses in 2002, and Spitzer publicly praised Grasso in return.

Kenneth Langone, founder and CEO of Invemed Associates, a brokerage firm, is another party named in the Grasso suit and could make trouble for Spitzer too. Langone also served on the NYSE comp committee, and he has money to burn (roughly $2 billion), and plans to use some of it burning Spitzer. Langone is considering buying ads that attack Spitzer, possibly when Spitzer runs for governor in 2006.

Spitzer seems unfazed. He says he has more ammunition against Grasso that could come out later, including expenses that were improperly charged to the exchange. He waved off criticism for not naming McCall, saying he drew the line between those who were misled and those who did the misleading.

It seems that someone was also misled about the guest list for Spitzer’s bash. Both Langone and Grasso say they received invites. They won’t be attending, though they do hope to help make Spitzer more of a household name-for reasons the attorney general may not appreciate.

Scroll to Top