New York Attorney General Eliot Spitzer sued Richard Grasso, the former New York Stock Exchange chairman, to recoup “well over $100 million” he said was inappropriate and illegal.

The Spitzer suit for over $100 million, which follows a four-month investigation, also names Ken Langone, the 68-year-old investment banker who chaired the NYSE’s compensation committee from 1999 to 2003. Both men were accused in the 54-page suit of misleading the exchange’s directors when the board approved Grasso’s pay.

Spitzer, 44, framed the suit in two ways at a news conference in his Manhattan office. First, he said, Grasso’s pay was not “reasonable” under the New York law that governs not- for-profit corporations such as the NYSE. He also cast the suit in moral terms, saying that Grasso, 57, was paid “too much” and abused his role as a regulator to win pay raises from directors whose firms he policed.

“Grasso should be ordered to return the unlawful compensation received by him in an amount to be determined at trial because he has been unjustly enriched,” the suit said.

The lawsuit accuses Grasso of manipulating guidelines used to set his compensation, which culminated in a $139.5 million payout last August and led to his ouster a month later.

“I am disappointed that New York’s Attorney General has chosen to intervene in what amounts to a commercial dispute between my former employer and me,” Grasso said in a statement. “I look forward to a complete vindication in court.”

William McLucas, a former SEC enforcement chief, said Spitzer’s case against Grasso may prove difficult to win in court.

“The question whether his compensation violated some law or rule is a far harder challenge for the attorney general’s office than the simple issue of whether people now think he made too much money,” said McLucas, a partner at the Wilmer Cutler Pickering LLP law firm in Washington.

Frank Ashen, 59, the exchange’s former head of human resources, settled Spitzer’s allegations that he provided inaccurate information to the board on Grasso’s pay. He agreed to return $1.3 million to the NYSE and agreed to testify against Grasso.

Ashen’s attorney, Bruce Yannett, a partner with Debevoise & Plimpton, denied that his client intentionally provided inaccurate or misleading information to the board. Yannett said he expected Grasso’s case to go to trial.

“If it was going to settle it would’ve settled prior to the complaint being filed,” he said.

The suit, which also names the NYSE as a defendant, asks a state court to rescind the pay package and to determine a “reasonable” level of compensation for Grasso.

A call to NYSE CEO John Thain was referred to the NYSE’s communications office. “We are supportive of Attorney General Spitzer’s efforts in this matter,” NYSE spokesman Ray Pellecchia said. “As a named party, it would be inappropriate to comment further.”

NYSE Chairman John Reed, the former Citigroup Inc. co- chairman who came out of retirement in September to replace Grasso, didn’t return a telephone call seeking comment.

Spitzer’s suit omitted other NYSE directors because they were “misled” on aspects of Grasso’s compensation contract. For example, the board wasn’t aware of $18 million in a so-called capital accumulation plan, a bonus award to Grasso in 1999 through 2001.

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