Saturday, March 18, 2006

Dick Grasso and the Constitution

The Wall Street Journal and Washington Post reported yesterday that Dick Grasso is getting some more bad publicity. Oh my. Seems he cited his Fifth Amendment right against self-incrimination during an SEC investigation into alleged trading improprieties at the New York Stock Exchange several years ago.

Now, what in heaven's name is the relevancy of this? After all, Grasso was never charged by the SEC or anything like that. Also, as one SEC Law blog points out, "taking the Fifth" could mean a variety of things other than "I'm hiding something."

So dragging Grasso's name through the mud over this seems to be overreaching at best. What makes it worse is that it's being done to make a "point." Which is that Grasso's not answering those question somehow indicates whether or not he was a "good market regulator" and thus maybe should pay back some of the bucks he received.

I'm serious. There are people out there who really think -- or at least say with a straight face -- that Grasso was paid $140 million to keep NYSE floor traders in line!

Is that or is that not the funniest thing you've ever heard?

The Post quoted a Spitzer deputy as saying: "The question here is whether the compensation [Grasso] received was reasonable. The stock exchange is first and foremost a regulator. . . He was questioned about his performance of his regulatory role." [Emphasis added.]

I placed one of the sentences in italics because it captuires one of the many misconceptions about the NYSE. The Big Board's principal function, as I describe in Wall Street Versus America, is self-perpetuation for the benefit of its members.

Dick did an outstanding job in that capacity, so I really wish they'd leave the man alone.


Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.

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