Grasso Seeks to Keep Suit in Federal Court

Lawyers for Richard Grasso fired the latest volley in the litigation over the ousted New York Stock Exchange chief’s compensation package, arguing Tuesday against moving New York Atty. Gen. Eliot Spitzer’s lawsuit back to state court.

Spitzer’s suit alleges violations of New York’s not-for-profit law and was originally filed in state court in May. But Grasso later had the case moved to a federal court, arguing that as head of the Big Board he was acting under federal oversight.

Spitzer and the NYSE, which also is a party to the suit, had asked that the case be sent back to a state venue. In a memorandum filed Tuesday in U.S. District Court in Manhattan, Grasso’s attorneys shot back that Spitzer’s and the NYSE’s “motions to remand” rested “on a thorough mischaracterization of the complaint.”

Spitzer, the memorandum argued, “charges Mr. Grasso with the violation of duties created by federal law and challenges relationships created by a federal regulatory scheme. By the very terms of the complaint, Mr. Grasso’s conduct cannot be judged without reference to standards created by federal law and rules implementing that law.”

An NYSE representative said the exchange “has fully set forth its reasons why it believes the case should be returned to state court and we’re very comfortable with the positions we set forth.”