News from Reuters
Grasso told to repay NYSE $100 million
Thursday, October 19, 2006
By Megan Davies, Joseph Giannone
NEW YORK (Reuters) - Former New York Stock Exchange
In a setback for the former Big Board boss, New York Supreme Court Judge Charles Ramos said in a 72-page written ruling that Grasso must repay certain payments and interest he received during his tenure at the NYSE.
Grasso, in a statement e-mailed by his lawyer on Thursday, said the ruling was "riddled with errors" and that he had instructed his attorneys to seek review from the appellate court.
Darren Dopp, a spokesman for New York Attorney General Eliot Spitzer, said earlier in the day the decision meant Grasso must return about $100 million paid to him by the NYSE.
Dopp said that in addition to returning more than $80 million in pension funds, Grasso must return tens of millions of dollars that were advanced to him as part of his lump sum payment in 2003. Grasso also must repay interest on $36 million in improper interest free loans he illegally took from the NYSE, Dopp said.
It was unclear whether the judge's comprehensive ruling marked the end of the Grasso trial or if hearings would continue, Spitzer's office said. The next hearing had been scheduled for November 30.
Grasso's full statement read: "Today's ruling is riddled with errors. One month ago, the Appellate Division told Justice Ramos not to try this case himself until the Appellate Division had decided important legal questions before them.
"Today, Justice Ramos somehow rejected the testimony of dozens of directors that they approved every dime they paid me, and decided that these men and women did not know what they were doing.
"Justice Ramos recently wrote that he takes comfort from the fact that the Appellate Division will review his rulings. So do I. I have instructed my attorneys to seek review from the appellate court, and look forward to the jury trial that the State Constitution promised me."
NYSE officials were not immediately available for comment on the latest ruling.
Spitzer sued Grasso in 2004 for return of some of the $187.5 million in salary, bonuses and retirement compensation he received. Spitzer, running for New York governor in November, said the payments were unreasonable under state law.
Judge Ramos denied Grasso's bid to seek damages from the NYSE over losing his job in 2003, concluding that Grasso had resigned. The judge said that Grasso could have forced the exchange to fire him. "Instead, for reasons best known to him, Mr. Grasso agreed to resign," Ramos said.
The judge also rejected Grasso's claims of defamation by the Big Board and former NYSE chairman John Reed and denied bids to dismiss certain claims made by Spitzer.
The ruling also said that Grasso had breached his fiduciary duties by failing to disclose to the NYSE compensation committee the amounts he was due under certain plans.
"That a fiduciary of any institution, profit or not-for-profit, could honestly admit that he was unaware of a liability of over $100 million, or even over $36 million, is a clear violation of the duty of care," Ramos wrote.
Grasso, who has consistently denied any wrongdoing, sought $48 million in compensation, plus interest, that he said was still due him.
Judge Ramos ordered that an accounting be made to determine how much interest Grasso owes on $35 million paid to him under one retirement plan and what part of $58 million paid under another plan had been properly earned.
Ramos is the same judge who argued that $625 million awarded as payment to lawyers in a 1998 tobacco industry settlement was "offensive" and unethical.
(Additional reporting by Jonathan Keehner)
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