Judge Denies Grasso Request on Lawsuit

By MATTHEW DALY Posted 16 March 2006 @ 05:03 am EET     Print     Reprint     E-Mail     Comments

NEW YORK (AP) - A judge on Wednesday refused to dismiss most of a complaint New York's attorney general filed against Richard A. Grasso, former president of the New York Stock Exchange, over his $187.5 million severance package.

Grasso's lawyers had argued that Attorney General Eliot Spitzer's office did not have the authority to challenge the former NYSE boss' compensation package, but state Supreme Court Justice Charles E. Ramos disagreed.

Ramos said the attorney general "represents the people of the State of New York, including the investing public," and "the interests of investors, individual or institutional, are the proper subjects of the attorney general's responsibility."

Grasso's lawyers had asked the judge to throw out four of the six claims Spitzer cited in his 2004 lawsuit. Those claims said in general terms that Grasso was improperly awarded excessive compensation, and they asked for the return of most of it.

The judge said that by "granting Mr. Grasso's allegedly unreasonable compensation, the NYSE board failed to ensure the integrity and viability of the NYSE as an institution, which, in turn, affects the interests of the New York investing public."

"Accordingly," the judge said, "the attorney general has the authority to bring the challenged claims."

Grasso's attorney did not immediately return a telephone message seeking comment Wednesday.

Spitzer's office said the judge's ruling means the entire case against Grasso will proceed.

"We are confident of the facts and the law in this matter and look forward to the trial," the office said in a statement.

Grasso resigned from the NYSE in September 2003 after news reports of his pay package caused controversy at the exchange. Spitzer is seeking the return of at least $100 million of the payout.

Meanwhile, Grasso has sued the NYSE for $50 million, claiming breach of contract and defamation.