N.Y. Court Dismisses 4 Charges in Grasso Case

Former New York Stock Exchange chief executive Dick Grasso won a significant victory yesterday when an appeals court dismissed four of six charges against him in a long-running dispute over his outsize compensation package.

New York Attorney General Andrew M. Cuomo (D) said he expected to appeal the ruling, which cast doubt on his authority to supervise operations of nonprofit groups in the state. The appeals court dismissed four allegations on the ground that they exceeded New York's Not-for-Profit Corporation Law -- the basis of charges that Grasso's $188 million paycheck was unreasonable given his job description.

The decision would still allow state authorities to proceed against Grasso on allegations that he knowingly engaged in the unlawful transfer of assets and that he violated his duty to the stock exchange by influencing and accepting big payouts. Those accusations require the government to present more proof of Grasso's intent, analysts said.

The court has yet to render a decision on a more practical question: whether it will uphold another ruling that last year ordered Grasso to repay more than $100 million to the state. Grasso has not turned over the money.

Yesterday's opinion by a divided New York state appeals court panel also means that Grasso will get his wish to have his case heard by a jury, not Justice Charles E. Ramos, who has ruled against him repeatedly. Grasso's lawyers have accused Ramos of bias in an attempt to remove him from the case.

"The authority to bring suit in what the attorney general perceives to be the interest of the state cannot trump contrary determinations about the public interest made by the Legislature," the court wrote.

Gerson A. Zweifach, a Washington-based lawyer for Grasso, declined to comment on the ruling. In previous interviews and court filings, Grasso has argued that the NYSE board -- stocked with luminaries including Henry M. Paulson Jr., who is now Treasury secretary, and former secretary of state Madeline K. Albright -- approved the deal, giving him at least a partial defense to the allegations.

Grasso, who began work at the exchange as a clerk more than three decades ago, left the NYSE under pressure in November 2003 after public outcry over his compensation. Former U.S. attorney Dan K. Webb, hired by the exchange board to investigate Grasso's pay, issued a report that called his compensation "far beyond reasonable."

The case was initiated in 2004 when Eliot L. Spitzer (D), now New York's governor, was state attorney general. The decision whether to appeal to the state's highest appellate court will be made by Cuomo, Spitzer's successor.

"We are reviewing the decision and expect to appeal," Jeffrey Lerner, a Cuomo spokesman, said.

Earlier this year, Cuomo hired former federal prosecutor Benjamin E. Rosenberg to lead the court effort against Grasso.