Friday, April 30, 2010

Litigation Communications in People v. Grasso - Introduction

( This is the first of six posts examining the litigation communications strategies in the lawsuit challenging the $139.5 million paid by the New York Stock Exchange to its CEO, Richard Grasso, shortly before the NYSE Board asked for his resignation.)

The turmoil surrounding Goldman Sachs has made Wall Street once again the lead story in the nation’s news media. It also provides an occasion to examine the role litigation communications played in a high profile lawsuit that involved the epicenter of Wall Street, the New York Stock Exchange.

The case was The People of the State of New York, by Eliot Spitzer, as Attorney General of the State of New York v. Richard A. Grasso, Kenneth G. Langone and the New York Stock Exchange, Inc. It was initiated by Attorney General Spitzer to force Mr. Grasso to return $100 million of the $139.5 million he received from the NYSE when he signed what turned out to be his final employment contract on August 27, 2003. The legal battle was waged from May 2004 until July 1, 2008, when a New York appellate court ruled that Grasso could keep all of his compensation.

Following his victory, Grasso gave an interview to PRWeek, where he discussed the role litigation communications played in his defense to the lawsuit. “Grasso bullish on PR’s worth,” PRWeek, July 21, 2008. Since the interview reveals Grasso’s public relations strategy, the fight over his compensation provides a good example of the use of communications in litigation.

This introduction serves two purposes. The first is to advise that a comprehensive review requires multiple posts. A post next week will begin by providing the background of the dispute. Subsequent posts will examine the twists and turns of the litigation and conclude by studying the communications strategy of Grasso and, to a lesser extent, that of his co-defendant, Kenneth G. Langone.

The second purpose of this introduction can best be described as a “point of personal privilege.” A few weeks after the NYSE fired Grasso, I participated in the NYSE’s Closing Bell Ceremony as a member of a delegation led by then-ABA President Dennis W. Archer. The photograph accompanying this introduction was taken just as Mr. Archer finished pounding the gavel, signaling the end of trading for the day. You can see my face over his right shoulder underneath the U.S. flag. The photograph shows that we ended trading on October 7, 2003, a day that the Dow finished up 22.67 points, or 0.2 percent, at 9,594.98. It was the fourth-straight day the Dow had closed up.

I had two distinct impressions after spending a day inside 11 Wall Street. First, the trading floor is much smaller than it appears on television; larger than a tennis court but smaller than a basketball court. Second, the building did not have the feel of an office building; instead it felt more like an exclusive private club.

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