updated 7/23/2004 2:18:53 PM ET 2004-07-23T18:18:53

Former New York Stock Exchange board member Kenneth G. Langone asked a federal judge Thursday to toss out the state attorney general's lawsuit against him in the Richard A. Grasso pay controversy, saying there was no legal basis for him to be included.

Because Langone did not benefit from the $18 million in Grasso's compensation that Attorney General Eliot Spitzer claims Langone hid from the rest of the NYSE's board, Langone's lawyers said in a motion to dismiss that Langone cannot be made to pay restitution.

"For all his bluster and political maneuvering, Mr. Spitzer has failed to clear the most basic legal hurdle in this case. He has been unable to show that Mr. Langone got any financial benefit here," said Jim McCarthy, a spokesman for Langone. "Asking for restitution when Mr. Langone didn't profit to begin with doesn't make any sense logically and it has no merit legally."

Spitzer filed suit against Grasso, Langone and the exchange itself on May 24. Spitzer is seeking the return of at least $100 million from Grasso and $18 million from Langone.

A call to Spitzer's office seeking comment was not immediately returned.

Langone was seeking to dismiss the only count of the complaint in which he was named.

On Tuesday, Grasso responded to Spitzer's lawsuit by filing a countersuit against the NYSE for at least $50 million, claiming that the exchange owed him additional compensation and that current chairman John Reed violated a "nondisparagement" clause in Grasso's employment agreement by speaking out against him after he resigned in September. Grasso sued Reed for defamation as well, and said any damages awarded to him in the countersuit would go to charity.

In another filing made Thursday, NYSE lawyers said Grasso is not entitled to have the lawsuit over his $187.5 million pay package heard in federal court, and that the case should be moved back to state court.

While Grasso claimed to have been acting under federal authority in heading the NYSE _ since it is governed by the U.S. Securities and Exchange Commission _ the exchange said the actions leading to his pay package were not part of his role in ensuring the NYSE's compliance with federal laws.

The exchange asked the U.S. District Court in New York to have the lawsuit remanded to state court, where it was originally filed, adding that as a defendant in the case, the NYSE did not agree to have the case transferred. Grasso moved the suit to federal court June 17.

While the exchange is named as a defendant, Spitzer is not seeking damages against the NYSE and has said the money recovered would be returned to the exchange. The NYSE has been working closely with Spitzer's office on the case, and has handed over a number of confidential documents to help bolster the case against Grasso and Langone.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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