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Would You Buy Stock in This Man?

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A few weeks after he was fired, Grasso and I went to lunch. He wasn’t looking quite like himself then. He had grown a beard, and his usually finely polished head showed signs of stubble. He looked like he wanted to give up, and as we discussed the media coverage, he plaintively expressed a desire for it all to end.

More recently, Grasso’s recovered his confident, aerodynamic look (he shaves his head himself now, he says, because the barber he always went to is around the corner from the exchange). He is clearly not happy about the context in which his name is often invoked these days. About two years ago, one of his daughters told him that a professor in her business class at Bucknell University cited him as a prime example of overpaid corporate executives. Grasso was livid but not as livid as Langone, a 1957 graduate, who has given so much money to the school that it has named an athletic facility after him. Grasso says he had to persuade Langone to refrain from making a formal complaint to the school.

Unlike most Wall Street executives, Grasso doesn’t golf or play tennis. He works out with weights occasionally, but he has no real hobbies, other than cooking dinner for his family on Sunday nights. When he was chairman, Grasso could be seen around town at some of New York’s most exclusive restaurants, always with clients of the exchange or business associates. Recently, I ran into him at Campagnola restaurant in Manhattan sitting down for a quiet dinner with one of his daughters. He comes into the city occasionally, riding the Long Island Rail Road rather than the chauffeured truck that used to take him everywhere, and spends much of his time at home, with the television tuned to stock-market news. He has time for the kind of errands he never did before, like driving his son to work.

Grasso concedes that starting over will be difficult, but for that he doesn’t blame Spitzer so much as John Reed, the former Citigroup CEO who replaced him as NYSE chairman. Grasso says Reed committed two unforgivable acts: He made comments to the press about Grasso’s pay that Grasso believes are defamatory (and for which he is suing Reed). And then he enticed Spitzer to take the case. Because of this, Grasso says, he is untouchable in the business world until the legal proceedings are done. Meanwhile, Grasso confirms that he’s doing some work for Joe Grano, the former chairman of UBS PaineWebber and a close friend, who has started his own private-equity firm. “I’m helping Joe with some of my contacts,” he says. He’s also helped former police commissioner Bernie Kerik with his private security firm; despite Kerik’s own recent legal difficulties, Grasso has not cut off ties to him and still calls Kerik a friend.

As with Paulson, Grasso has recently softened his public remarks about Spitzer, perhaps looking ahead to when the A.G. will be governor and even less of a good person to be enemies with. The fact is that Grasso and Spitzer were allies not so long ago. When Spitzer was investigating Wall Street research practices in 2002, he enlisted Grasso’s aid in getting the big brokerage firms to agree to a settlement, then announced the deal at the stock exchange, giving Grasso top billing at the press conference.

Even after the story broke about Grasso’s pay, Spitzer showed support. In May 2003, the men ran into each other when they both testified before the U.S. Senate Banking Committee about corporate scandals. Before they sat down, Spitzer spotted a newspaper article with Grasso’s photo and turned to Grasso with a smile and said, “Nice picture.” Several months later, when Grasso’s contract was extended by the board, Grasso says he had a conversation with Spitzer in which Spitzer said “glad to have you around” for a while.

Nowadays, of course, Spitzer is making Grasso’s life miserable. The A.G.’s staff says the investigation has shown that Grasso used the exchange as his personal piggy bank. They say he charged the exchange for everything from pretzels to expensive dinners to flowers he once sent to Langone’s wife. Though Grasso won’t attack Spitzer directly, he accuses the lead attorney on the case, Avi Schick, of playing dirty and leaking personal e-mails to the press, as well as other information that suggests his family took advantage of perks from the NYSE.

As the personal becomes mixed up with the political, the pressure on Grasso to settle grows. How much dirty laundry is he willing to see aired? What other allegations could emerge at trial? “They think by sleazing me they’re going to get me to settle,” he says. “But it has only strengthened my resolve.”


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