New York Attorney General Eliot Spitzer wants to have his lawsuit against former New York Stock Exchange Chairman Dick Grasso heard by a state rather than a federal court. Lawyers for Grasso have asked for the case to be transferred to a federal court.
The NYSE is regulated by a federal agency, the Securities and Exchange Commission, but Spitzer says none of the issues raised by the complaint — which centers on the $188 million pay package Grasso received while working at the NYSE — fall within the jurisdiction of the federal courts.
The NYSE is registered as a not-for-profit corporation in New York, though it acts as an exchange and regulates publicly traded companies that are governed by federal securities laws.
Spitzer’s office contends that Grasso manipulated the process in which his compensation was approved, while Grasso has defended the legality of his contract and accused Spitzer of using the case to pursue his political career.
Grasso was forced out of the NYSE last September after his compensation was made public. Former Citigroup co-head John Reed was then brought in as interim chief executive officer to overhaul its internal governance procedures.
Spitzer’s lawsuit also named Kenneth Langone, co-founder of home improvement store Home Depot Inc. and chairman of the NYSE’s compensation committee during the period when Grasso’s pay was highest, as a defendant. Spitzer is suing Grasso under New York’s not-for-profit laws, which say executive pay must be commensurate with services rendered.