Reply #15: Dick Grasso Is Dangerous

[UpInArms]

http://www.forbes.com/work/2004/03/05/cx_da_0305topnews.html

excerpt:

"Mr. Grasso has no intention of returning any portion of his compensation to the Exchange. If the Exchange believes it has a valid claim, it should file it, rather than conducting a campaign through the press and intermediaries in an attempt to pressure Mr. Grasso," Sullivan wrote.At this point, Grasso is a very dangerous individual because he has nothing to lose-- except of course the $140 million. He has already lost his job and there is no indication he is about to take another. If SEC or the New York Attorney General does go after him, he could wreak havoc-- much like Oliver North threatened to do-- by exposing dirty laundry all over Wall Street.

The subpoenas were sent to Wall Street honchos like Bear Stearns' (nyse: BSC - news - people ) James Cayne, Morgan Stanley's (nyse: MWD - news - people ) Philip Purcell and Lehman Brothers' (nyse: LEH - news - people ) Richard Fuld, as well to ex-Time Warner (nyse: TWX - news - people ) CEO Gerald Levin. Home Depot (nyse: HD - news - people ) Director and key Grasso ally Kenneth Langone, who just sold his seat on the NYSE, will also come under scrutiny as he sat on the NYSE compensation committee. So would Goldman Sachs (nyse: GS - news - people ) CEO Henry M. Paulson Jr., former boss of current NYSE president John Thain.

Spitzer is also said to be considering a lawsuit against the directors who approved Grasso's deal.

But whether the directors are backing the suit or the defendants in it, Grasso's lawyers would likely seek to question them about the meaning of "excessive" and what they consider proper disclosure of their own pay packages. This would get ugly, and, for that reason, look for Spitzer and the SEC to drop it.

Sullivan has worked this tactic, which is legitimate, before, and with much more at stake. After Oliver North was indicted in March 1988, along with many others, Sullivan succeeded in getting many of the charges dismissed on the grounds that the government would not or could not comply with his discovery demands. He also represented North during his Congressional testimony. After North was found guilty on three counts, mostly involving obstruction of justice, Sullivan successfully appealed on the ground that his trial might have been impermissibly tainted by the use of congressional testimony, for which North had received immunity.

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