A New York appeals court has dismissed four of six claims against former New York Stock Exchange chairman Richard Grasso in a big setback to the state's attempt to recover more than $100 million (€73.9 million) in compensation.
An appeals court in Manhattan, in a three-to-two decision, concluded that four of the claims against Mr Grasso were "not within the scope" of the New York attorney general's authority to bring.
Experts in the case said the ruling would most likely pave the way for an appeal to the state's highest court. The attorney general's office could also decide to seek an out-of-court settlement or, eventually, a trial based on the two remaining claims.
Mr Grasso, who ran the world's largest stock exchange for eight years, was forced out in 2003 following a public outcry over his $187.5 million compensation package.
He was sued in 2004 by then-attorney general Eliot Spitzer, now governor, who charged the package was excessive and violated state law. The office of the state's new attorney general, Andrew Cuomo, said earlier this year it would continue the lawsuit against Mr Grasso. Anthony Sabino, a professor of law at St John's University's Tobin College of Business, said the ruling was a "huge setback" for the attorney general's office.
"There was certainly a debatable point as to whether or not the attorney general was overstepping his bounds," said Mr Sabino, adding the case would "drag out" with an appeal likely to the state's highest court, the New York Court of Appeals.
"It's going to take a lot of convincing to ask the seven judges at the court of appeals to overturn even a slim majority. Mr Grasso has an edge."
Mr Sabino said he doubted there would be a settlement.
"This was a case brought by a democratic attorney general who is now governor. It's unlikely that one of the guys on his ticket, such as Mr Cuomo, are going to drop this."
Mr Grasso ran the Big Board when it was a member-owned institution. The exchange is now a publicly traded, for-profit company - NYSE Group Inc. The decision yesterday followed an earlier lower court judge ruling that said Mr Grasso should return a large portion of the compensation paid to him by the NYSE.
