|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
Ex-Stock Exchange Chairman Grasso Loses Bid To Dismiss Compensation Suit
Anthony Lin – New York Law Journal
Law.com. March 16, 2006
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EXCERPT: A New York judge ruled Wednesday that Attorney General Eliot Spitzer has the authority to challenge the allegedly unreasonable compensation of former New York Stock Exchange Chairman Richard A. Grasso on behalf of an investing public that would otherwise lack standing to sue over the claimed lack of oversight at the exchange.
Spitzer has charged that Grasso and his ally on the NYSE's compensation committee, Kenneth G. Langone, put together an almost $200 million pay package for Grasso in violation of the state's non-profit law, which requires that executive compensation be reasonable. Grasso in turn argued that Spitzer had no standing under non-profit laws to police the NYSE, which he likened more to a for-profit corporation in that it was controlled at the time by its 1,366 seatholders, among the wealthiest people in the country and more than capable of defending their own and the exchange's interests. But in denying Grasso's motion to dismiss, Manhattan Supreme Court Justice Charles Ramos said the most significant difference between the exchange and other non-profits was not its governance by seatholders but its regulatory authority over a securities market relied upon by millions of investors in New York alone. "The investing community relies on the integrity of the market as well as the NYSE's governance and regulatory structure which serves it," he wrote in Spitzer v. Grasso, 401620/04, adding, "The interests of investors, individual or institutional, are the proper subjects of the Attorney General's responsibility." The judge said Spitzer was properly acting under common law doctrine permitting a sovereign to sue on behalf of the public interest. The judge distinguished the attorney general from the seatholders, who he said lacked the incentive to police NYSE costs. |
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