Grasso, Knight Equity (Others?): The Summer of Vindication?

[WSJ Law Blog]

Well that was quick. This morning, a New York court threw out the remaining charges against former NYSE chief Dick Grasso. This afternoon, NY AG Andrew Cuomo said he won’t appeal. Voila! Case closed, Mr. Grasso!

We at LBHQ lumped the news together with some other government defeats in big Wall Street cases, and thought, hey, how about a vindication round-up! After all, beating the government ain’t easy, and, even if the below wins don’t amount to Frank Quattrone or Arthur Andersen (criminal stuff), they’re big wins nonetheless.



Dick Grasso: Earlier today, a New York appeals court tossed out a summary judgment decision that Grasso, ex-Big Board chairman, must return a portion of his $187.5 million comp package. The court also dismissed the two remaining causes of actions against Grasso and one against former NYSE director Ken Langone, saying Cuomo can no longer pursue the claims under the state?s not-for-profit law since the NYSE has become a for-profit company, NYSE Euronext Inc. Click here for the WSJ story. Grasso’s legal team included Mark Zauderer, Brendan Sullivan and Gerson Zweifach .

Knight Equity Markets: A couple weeks back, following a 14-day bench trial, a federal judge said the SEC failed to prove that former Knight Equity Markets CEO Kenneth Pasternak defrauded the firm?s clients. Charges were also dismissed against John Leighton, the former head of institutional sales at Knight Securities. New Jersey district court judge Joel Pisano ruled that witness testimony ?undermined? the SEC?s theory of the case. The SEC had alleged that Pasternak and others failed to execute customers? stock orders at the best price and made millions of dollars in ?excessive? comp from the trades. Pasternak’s legal team included James Wines, Howard Schiffman and Chris McLean at Dickstein Shapiro. Leighton was repped by Joel Davidson at Davidson & Grannum.



Hank Greenberg?: Okay, he doesn’t belong in this category yet, but his recent legal history is worth reciting.

The former CEO of AIG stepped down in 2005 as the company came under investigation for its accounting practices. Greenberg’s legal future looked uncertain, and still does. In 2006 AIG doled out $1.6 billion to settle allegations of accounting improprieties and other matters. Then NYAG Spitzer brought civil charges against Greenberg, but some were later dropped, and he’s still fighting the others.

Earlier this year, four former execs of General Re, a unit of Berkshire Hathaway, and one former AIG executive were convicted of inflating AIG’s reserves through fraudulent reinsurance deals. In that case, Greenberg was an unindicted co-conspirator, and the judge later issued a decision that said the government had presented ?sufficient evidence? for a jury to conclude that the AIG conspiracy started with a phone call by Greenberg. But he has not been charged. In May, the SEC sent Greenberg a so-called Wells notice, indicating that he may face civil charges for his alleged role in an effort to improperly boost AIG?s financials. So far, no charges have been filed.