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Grasso Sues NYSE, Reed for $50 Million

Ex-Chairman Also Offers Rebuttal to Spitzer

By Ben White
Washington Post Staff Writer
Wednesday, July 21, 2004; Page E01

NEW YORK, July 20 -- Former New York Stock Exchange chairman Dick Grasso struck back at the exchange on Tuesday, filing a lawsuit against the NYSE and its current chairman, John S. Reed, seeking at least $50 million for breach of contract and defamation of character.

Grasso also rejected claims made in a lawsuit filed against him by New York Attorney General Eliot L. Spitzer and sought dismissal of part of Spitzer's suit. Spitzer went to court in May, demanding that Grasso return more than $100 million of the $139.5 million paid to him by the exchange last year.


Former NYSE chairman Dick Grasso seeks $50 million for breach of contract and defamation of character. (Matthew Cavanaugh -- AP)

_____FindLaw (pdf)_____
Grasso's Answer & Counterclaims
N.Y.'s Suit Against Grasso
Grasso's Aug. 2003 Employment Agreement
Grasso's 1999 Employment Agreement
_____NYSE_____
Former NYSE Director Asks Judge to Dismiss Suit (The Washington Post, Jul 23, 2004)
Grasso Sues NYSE for $50 Million (The Washington Post, Jul 20, 2004)
Grasso Wants Suit Moved To U.S. Court (The Washington Post, Jun 18, 2004)
Full Coverage: Latest news and updates.

Grasso, who became chairman in 1995, was forced to resign from the exchange in September when news of his compensation package outraged shareholder groups and federal regulators.

For nearly a year, he has fought an increasingly bitter public battle with the exchange and especially Reed, the former co-chief executive of Citigroup who was brought in last year to steady the NYSE after Grasso's embarrassing ouster.

"These filings are just one step in the process. We are confident as the case progresses the attorney general's claims will prove to have no merit and that Mr. Grasso is the only person entitled to any recovery in this matter," said Eric Starkman, a spokesman for Grasso.

The exchange referred calls about Grasso's suit against it to Dan K. Webb, a former federal prosecutor handling the Grasso matter for the NYSE. "We believe these claims are entirely without any legal or factual merit whatsoever," Webb said in a prepared statement.

Spitzer declined to comment. His spokesman, Darren Dopp, said, "We remain confident of our case and look forward to trial."

In his May lawsuit, Spitzer said Grasso used threats and promises to bully exchange directors into awarding him enormous salary and benefits packages.

Spitzer said the $139.5 million payment, which included deferred compensation and retirement benefits covering Grasso's eight years as chairman, violated New York law requiring pay for chief executives at not-for-profit organizations such as the exchange be "reasonable" and "commensurate with services performed."

Spitzer also sued former exchange compensation committee chairman Kenneth G. Langone, alleging that Langone crafted contracts that led to the payout while keeping other board members largely in the dark. Langone's response is expected by Friday.


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