Courtesy of Pam Martens.
Three well known figures on Wall Street find themselves entangled in NYU’s mortgage-gate, exactly one decade after their roles were scrutinized in the biggest New York Stock Exchange scandal since the Senate hearings of the early 1930s exposed the shady dealings of its members.
Martin Lipton, Chair of NYU for the Past 15 Years
In 2003, Wall Street super-lawyer, Martin Lipton, was advising his friend, Richard (Dick) Grasso, CEO of the New York Stock Exchange, on a massive compensation plan while simultaneously serving as counsel to the Stock Exchange’s committee on governance and as Chairman of its Legal Advisory Committee.
Joining Lipton in the unpleasant public spotlight was Kenneth Langone, Chair of the Exchange’s Compensation Committee, which had awarded Grasso $130 million in compensation and benefits for the three-year period of 2000 through 2002. That sum represented 99 percent of the Exchange’s net income for those three years according to then New York State Attorney General Eliot Spitzer in a court filing.
Members of the Compensation Committee included executives of the very firms regulated by the Exchange who had excellent reasons to want to curry favors with Grasso. Laurence D. Fink, CEO of the money management firm, BlackRock, was one of the members of the Compensation Committee. At the time this was playing out, the New York Stock Exchange was a not-for-profit institution subsidized by the taxpayer.
A few days before Labor Day in 2003 (timed to dampen media reaction), the Board of the Exchange issued a press release indicating it had paid a lump sum of $139.5 million to Grasso. Shortly thereafter, the Board learned that Grasso was owed another $48 million under his 2003 contract, which Lipton, according to an internal review, said “had been earned by Grasso and was legally his.”
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