The former head of the New York Stock Exchange, Richard Grasso, has filed a $50 million lawsuit against the exchange and its current chairman for firing him from his multi-million-dollar job.
Richard Grasso is being sued by the stock exchange to return his controversial $188 million pay package. Now he is seeking at least $50 million in damages, according to a countersuit he filed in a federal court in New York City.
Mr. Grasso says he was forced to resign from his job as chief of the world's largest stock exchange without cause, damaging his once stellar reputation.
Mr. Grasso resigned in September 2003 when his gargantuan, but undisclosed, compensation was revealed as part of reforms put forward by the Securities and Exchange Commission, the federal body regulating Wall Street.
In a news conference at the time, John Reed, the former chief of the banking giant Citigroup, who replaced Mr. Grasso, publicly referred to his lavish pay as embarrassing for the exchange.
"This whole episode is embarrassing," he said. "I should be happily sitting on a beach somewhere reading a book and the stock exchange should be operating well. We have had a number of embarrassments in corporate America over the past year that do embarrass me, and what happened here at the stock exchange is one of those."
Mr. Grasso says Mr. Reed's statement implied wrongdoing.
New York University law professor Harry First, an expert on Wall Street scandals, says Mr. Grasso's suit is a controversial way to differentiate his situation from the series of corporate scandals that rocked the nation and to clear his name.
"Grasso feels he was trying to lump him in with other CEO's, the Kenneth Lays of the world, who are accused of criminal wrongdoing, which he has never been accused of and is not being accused of," he said.
Professor First says beyond both lawsuits, there is a much larger issue of the way in which executive compensation packages have been put together and paid for in the United States.
"It has gotten so out of whack and investors maybe could turn a blind eye when it looked like, 'Who cares, everything has gone up so much,'" he said. "But that was wrong then and it is wronger now. It has just gotten way out of line. There is not much shame."
Mr. Grasso joined the New York Stock Exchange in 1968 as a floor clerk earning $80 a week. He rose in the organization to become president and chief operating officer, then vice chairman, and eventually its chairman in 1995.
Mr. Grasso, 57, has been widely credited with getting financial markets back up and running after the September 2001 terrorist attacks on the World Trade Center and for modernizing the Big Board.