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Richard Grasso

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"Dick Grasso" redirects here. For the Argentine researcher, seeDick Edgar Ibarra Grasso.
Richard Grasso
Richard “Dick” Grasso in 2005
Born(1946-07-26)July 26, 1946(age 78)
Jackson Heights,New York,U.S.
Other namesDick Grasso
Occupations
  • Business executive
  • investor
  • trader
  • entrepreneur
Years active1968-2003
Known forFormer chairman and CEO of theNYSE(1995–2003)
Title
Board member of
[1]

Richard A. "Dick" Grasso(born July 26, 1946[2]inJackson Heights, Queens,New York) was chairman and chief executive of theNew York Stock Exchangefrom 1995 to 2003. He started in 1968 when he was hired by the Exchange as a floor clerk.

He later became embroiled in controversies and lawsuits about his allegedly excessive pay package and $188.5 milliongolden parachute.The New York Attorney General filed a lawsuit which challenged the compensation as excessive for the NYSE, which at the time was a nonprofit. However, on July 1, 2008, theNew York State Court of Appealsdismissed all claims against Grasso because the NYSE had changed its status from a nonprofit to a for-profit organization, which meant that the attorney general had lost standing to sue Grasso.[3]

Early life and education

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Grasso was raised by his mother and two aunts inJackson HeightsinNew York City.His father left the family when Richard was an infant.[4]He graduated fromNewtown High SchoolinQueensand attendedPace Universityfor two years before enlisting in theArmy.

Career

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New York Stock Exchange

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Two weeks after leaving the Army in 1968, Grasso became a clerk at theNew York Stock Exchange.Grasso moved up in the ranks, becoming president of the exchange and then CEO in the early 1990s. As CEO, he was credited with cementing the NYSE's position as the preeminent U.S. stock market. Grasso also served as an advisory board member forYale School of Management.

FARC visit

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On June 26, 1999,Reutersreported that Grasso met withColombianrebels, theFARC.FARC is considered aterrorist organizationby theU.S. State Department(on itslist of Foreign Terrorist Organizationssince 1997) and is allegedly responsible for kidnappings andnarcoticstrafficking in order to bankroll their revolutionary activities (see:narcoterrorism).[5]

The article quoted Grasso as saying, "I invite members of the FARC to visit the New York Stock Exchange so that they can get to know the market personally". Some found the meeting inexplicable, considering the FARC supportsanti-capitalistideals and has no officially recognized financial clout. Grasso told reporters that he was bringing "a message of cooperation from U.S. financial services".[6]

NYSE compensation controversy

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On August 27, 2003, it was revealed that Grasso had been given adeferred compensationpay package worth almost $140 million. This caused immediate controversy, as the hand-picked compensation committee consisted mainly of representatives from NYSE-listed companies over which Grasso had regulatory authority as its CEO.[7]

Following criticism of the deal fromU.S. Securities and Exchange CommissionchairmanWilliam H. Donaldson,who preceded Grasso as Chairman of the NYSE, and several pension fund heads (who control some of the largest pools ofequityinvestment capital in the United States), the NYSE board asked Grasso to leave in a 13–7 vote. He stepped down on September 17, 2003, and several senior officials followed in the same month.[8]Law firmWinston & Strawncarried out an investigation, on behalf of the NYSE, and a comprehensive report analyzing Grasso's alleged excessivecompensation and benefits,and the governance failures behind it, was completed in December.[9]

Lawsuit

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On May 24, 2004, Grasso was sued byNew York State Attorney GeneralEliot Spitzerdemanding repayment of the majority of the $140 million pay package. Prior to being dismissed Grasso had been in line to receive an additional $48 million over the $139.5 million he had already received; he was not paid the additional funds.[citation needed]

On May 26, 2004, Grasso responded with a counter-suit against the Exchange and its chairmanJohn Reed.The counterclaim was twofold; It sought restitution of unpaid portions of his retirement package and further accused certain individuals at the Exchange of "besmirching his name". Grasso went on to place a 1,500-wordop-edarticle in theWall Street Journaldetailing this counter-suit as well as his grievances against Spitzer. The lawsuit against Grasso continued to move toward trial in 2006 with neither side showing any interest in settling.[citation needed]

On October 19, 2006, it was reported that theNew York State Supreme Courtissued a summary decision ordering Grasso to repay a significant amount of excess compensation in an article entitled "Ex-NYSE chief ordered to return part of $188M".[10]Although Grasso will appeal, the same article reports that Spitzer's office has disclosed the amount of restitution to be in the tens of millions of dollars. In his ruling, Judge Ramos wrote that Grasso's failure to disclose the true extent of his total compensation prevented the compensation committee from exercising its fiduciary duties. The above CNN article also reported that Grasso's counterclaim of defamation was dismissed.

On July 1, 2008, theNew York State Court of Appealsdismissed all claims against Grasso. The majority opinion stated that since the NYSE was now asubsidiaryof a for-profitmultinational corporation,the State of New York had no oversight over the affairs of the company in this matter and that prosecution was "not in thepublic interest".Current attorney generalAndrew Cuomostated that he had no intention to appeal this decision any further and that the case was effectively over. The court ruled that Grasso was entitled to the entirety of his compensation. The court also dismissed Grasso's actions against the NYSE and other parties as related to this matter.

During an SEC investigation Grasso invoked hisFifth Amendmentright againstself-incriminationin refusing to answer questions regarding his conduct during an NYSE investigation into possibly improper activities by Exchange specialist firms.[11]The specialist firms paid $242 million in settlements with the SEC, and the NYSE itself was censured for failing to properly supervise the specialist firms.[12]

The suit against Grasso came under criticism, with journalistCharles Gasparinolambasting it in the epilogue to his book,Blood on the Street.He is the subject of a book by Gasparino,King of the Club.

References

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  1. ^"Richard Grasso Biography | Booking Info for Speaking Engagements".allamericanspeakers.Retrieved2023-05-24.
  2. ^Who's Who In Finance and Business - 2004-2005(34 ed.). 2004.
  3. ^Lee, Ruben (17 January 2011).Running the World's Markets.Princeton University Press. pp. 196–197.ISBN9780691133539.Retrieved2019-05-15.
  4. ^Thor Valdmanis (September 18, 2003)."NYSE faces Thursday without Richard Grasso".USA Today.Retrieved2006-06-16.
  5. ^Koppel, Andrea (2001-09-10)."U.S. to classify Colombian group as 'terrorist'".CNN.Retrieved2012-01-02.FARC and ELN were both designated as Foreign Terrorist Organizations by the secretary of state in October 1997.
  6. ^"NYSE Chief Meets Top Colombia Rebel Leader".Reuters.1999-06-26.Retrieved2006-02-27.
  7. ^Webber, David H.(April 2018).The Rise of the Working-Class Shareholder: Labor's Last Best Weapon.Harvard University Press. pp. 11–12.ISBN978-0-674-91946-4.Retrieved15 November2019.
  8. ^"International chief Georges Ugeux resigns from NYSE".marketwatch.September 2003.
  9. ^"Report to the NYSE on investigation relating to the compensation of Richard A. Grasso".Winston & Strawn LLP. 15 December 2003.
  10. ^"Grasso Ordered to Return NYSE Pay".NPR.
  11. ^"Grasso Took the Fifth In SEC Trading Probe".Washington Post.March 17, 2006.
  12. ^"SEC charges the New York Stock Exchange with failing to police specialists".SEC. 2005.
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