Conventional wisdom holds that Spitzer’s latest salvo against former New York Stock Exchange chairman Richard Grasso–to recoup a chunk of Grasso’s disputed $139.5 million pay package-will earn him even more points. “The public is irate over excessive compensation,” says Jacob Zamansky, a lawyer who represents investors. But conventional wisdom may be wrong. Grasso has launched a spirited attack on Spitzer’s motives, portraying himself as a victim of an ambitious pol. He’s seized on the fact that Spitzer didn’t name New York state Democratic Party heavyweight H. Carl McCall, the head of the stock exchange’s compensation committee who approved Grasso’s pay deal, in his civil suit filed last week.
What’s more, Spitzer and Grasso have a history, much of it good, which Grasso is likely to draw on in court. Grasso was one of the first to laud Spitzer for his attack on research abuses in 2002, and Spitzer publicly praised Grasso in return. In August, after Grasso’s lavish contract was renewed, Spitzer congratulated him, saying he was “happy to have the opportunity to be working with you,” according to Grasso (Spitzer doesn’t deny the comment). Grasso plans to use that conversation to call Spitzer as a character witness.
Kenneth Langone, founder and CEO of Invemed Associates, a brokerage firm, is another party named in the Grasso suit and could make trouble for Spitzer too. Langone also served on the NYSE comp committee, and he has money to burn (roughly $2 billion), and plans to use some of it burning Spitzer. Langone is considering buying ads that attack Spitzer, possibly when Spitzer runs for governor in 2006, NEWSWEEK has learned. He has also hired PR bulldog Jim McCarthy, who fought The New York Times over its controversial coverage of the Augusta National Golf Club’s policy barring women members.
Spitzer seems unfazed. He says he has more ammunition against Grasso that could come out later, including expenses that were improperly charged to the exchange. He waved off criticism for not naming McCall, saying he drew the line between those who were misled and those who did the misleading.
It seems that someone was also misled about the guest list for Spitzer’s bash. Both Langone and Grasso say they received invites. They won’t be attending, though they do hope to help make Spitzer more of a household name-for reasons the attorney general may not appreciate.
