Legal News

Green Grasso? NY High Court Affirms Ruling Favoring Former NYSE Chief

By Ashby Jones

Why is Dick Grasso smiling? Possibly because earlier today he inched closer to being able to retain at least a portion of his $187 million compensation package, granted to him by his former employer, the New York Stock Exchange. The New York State Court of Appeals upheld a lower court ruling from last year that threw out several key parts of New York Attorney General Andrew Cuomo’s case over the package. Click here for the WSJ story, here for the decision.

The high court affirmed a split decision finding that the attorney general’s office “does not have the authority” to bring major parts of its case under the state’s not-for-profit law.

In a 3-2 decision in May 2007, a court in the state’s appellate division threw out four of six causes of action against Mr. Grasso. It said the attorney general’s office could bring two causes of action — unlawful transfer of corporate assets and breach of fiduciary duty. Those statutory claims are pending.

“The settlement value is greatly reduced” because of today’s decision, says John Coffee, a law professor at Columbia University. “For Cuomo, I’m not sure he’d want to take the risk to go to trial in a case where he needs to make a high showing and he could be embarrassed by losing.”

Coffee thinks the ruling takes away some of his office’s power to bring such cases. So, in his opinion, Cuomo should try to settle this case quickly and spend more of his time pushing the legislature to give his office more authority in policing not-for-profit institutions in New York. Cuomo’s office didn’t immediately comment.

“A side-by-side comparison of the challenged claims and the statutory claims reveals that the attorney general has crafted four causes of action with a lower burden of proof than that specified by the statute, overriding the fault-based scheme codified by the Legislature and thus reaching beyond the bounds of the attorney general’s authority,” the Court of Appeals said Wednesday.

The state attorney general’s office, under then-New York Attorney General Eliot Spitzer, sued Grasso in 2004, alleging his pay was excessive for a not-for-profit corporation. Grasso, who left the NYSE in 2003 amid turmoil over his pay, has denied wrongdoing. The Big Board has since become a publicly traded for-profit company, NYSE Euronext Inc.

Mark Zauderer, a lawyer for Grasso, declined comment Wednesday.

Photo: AP

Full post as published by Law Blog - WSJ.com on June 25, 2008 (boomark / email).