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N.Y. attorney general readies Grasso suit

New York Attorney General Eliot Spitzer Monday will sue several former New York Stock Exchange executives, including former Chief Executive Richard Grasso, for breach of fiduciary duty, CNBC reported.
/ Source: The Associated Press

The New York state attorney general was expected to file suit against former New York Stock Exchange chairman and chief executive Richard Grasso and former exchange board member Kenneth Langone Monday, claiming the two abrogated their fiscal responsibility by approving Grasso’s $187.5 million compensation package.

Sources close to the matter, speaking on condition of anonymity, confirmed that attorney general Eliot Spitzer was prepared to file suit against the two. A Spitzer spokesperson had no comment on the case, but Spitzer’s office scheduled a press conference for 1 p.m. Monday. to discuss a “lawsuit regarding the New York Stock Exchange.”

CNBC reported that former NYSE human resources executive Frank Ashen reached a deal with Spitzer’s office to testify against Grasso and Langone. Ashen, who would have been heavily involved in managing Grasso’s pay package, could prove to be a key witness against the former NYSE chief. Now a private human resources consultant, Ashen did not immediately return a call seeking comment.

Grasso resigned as chairman and CEO of the exchange in September as the controversy surrounding his pay reached its peak. Grasso has received $139 million of his compensation package, and recently told Newsweek he would forgo the rest if the exchange would apologize for tarnishing his name.

The NYSE, for its part, has already asserted that Grasso should return the bulk of his compensation. In February, interim NYSE chairman John Reed wrote to Grasso’s lawyer, demanding the return of $120 million; Grasso refused.

Langone, who headed the board’s compensation committee from 2000 to 2003, is considered a close friend and confidante to Grasso, and would have been a key player in getting board approval for his compensation package. A spokesman for Langone, who left the NYSE board of directors last year, had no immediate comment.