New York Attorney General Eliot Spitzer is prepared to sue former New York Stock Exchange Chairman and Chief Executive Dick Grasso, as well as some former NYSE directors, as early as next week, as part of an effort to recoup some of Grasso’s $188 million pay, according to people familiar with the matter.
Grasso resigned in September 2003 amid a public outcry over his compensation package, which was a combination of salary and deferred benefits.
Grasso’s lawyer Brendan Sullivan Jr., a partner in Williams & Connolly, a Washington law firm, “has a longstanding policy of not commenting to the press,” his assistant said on Thursday.
Under New York statutes, the compensation of executives at not-for-profit corporations such as the NYSE must be commensurate with services rendered.
It’s still possible that plans to file any lawsuits against Grasso will be headed off by an out-of-court settlement, sources say. However, efforts to reach a settlement thus far have been unsuccessful.
Spitzer has been steadily building a case against Grasso since early this year, when the NYSE’s new leadership requested that regulators probe the circumstances behind Grasso’s multimillion-dollar pay.
The attorney general’s move could become the opening salvo in a litigious battle royal.
In a recent Newsweek magazine article, Grasso suggested he would “go to war” in order to prove he did nothing wrong. He said he intended to keep all of the $140 million he was paid, but would consider giving up the $48 million in deferred pay if the exchange agreed to clear his name.
The lawsuit also could lead to further public embarrassment for the exchange, which has struggled to repair its broken public image after the Grasso affair and allegations of improper trading by its elite market-makers.
A suit is also likely to lead to public opprobrium against some of the most highly recognizable names on Wall Street and in corporate America, several of whom as NYSE board members approved Grasso’s employment contract in 1999