Cuomo Drops Case Against NYSE’s Grasso
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Attorney General Cuomo is abandoning one of the highest-profile cases brought by his predecessor, Eliot Spitzer.
Yesterday a mid-level appellate court in Manhattan ruled against a bid by the attorney general’s office to force a former New York Stock Exchange chief, Richard Grasso, to give back to the exchange much of his $187.5 million in pay. Just hours after the decision, Mr. Cuomo’s office said it would let the matter rest without an appeal.
“We have reviewed the Court’s opinion and determined that an appeal would not be warranted,” a spokesman, Alex Detrick, said in a statement. “Thus, for all intents and purposes, the Grasso case is over.”
Mr. Cuomo’s decision to drop the case is a reminder of Mr. Spitzer’s sudden disappearance from public life. Before Mr. Spitzer left office this year due to a scandal involving a call-girl ring, Mr. Cuomo had stayed the course against Mr. Grasso, even hiring a top white-collar defense attorney in private practice to manage the case.
The effort to force Mr. Grasso to return the money became a top priority for Mr. Spitzer’s office beginning more than four years ago, after Mr. Grasso was ousted as stock chief when the sum total of his compensation there became publicly known. Mr. Spitzer sued under the theory that the pay was “unreasonable” for a nonprofit entity, which the stock exchange then was. The case became a central battle in Mr. Spitzer’s campaign against Wall Street.
The decision handed down yesterday, which dismissed the remaining two of the eight original claims against Mr. Grasso, left Mr. Cuomo with the option of appealing to the Court of Appeals in Albany to reinstate those claims.
The 3-1 court decision turned on the NYSE’s transformation into a for-profit corporation as part of its 2006 merger with Archipelago Holdings Inc.
While the attorney general has the authority to police the amount of pay received by nonprofit executives, the court ruled that the authority did not extend to prosecuting such a suit in an effort to return money to a corporation that was now for-profit. An decision last week by the Court of Appeals had dismissed the bulk of the attorney general’s case.
One of Mr. Grasso’s lawyers, Mark Zauderer, declined to comment.
