The SEC vs. Dick Grasso
by Gregory Bresiger
September, 2003
Once again we see the anomalies of the regulators and their odd rules and regulations. The latter are flawed systems, systems by which the government, though endless bureaus, commissions and agencies tries and fails, again and again, to keep up with dynamic markets. Regulatory bodies are often like worms that infect your computer. They are constantly reproducing no matter one’s efforts.
(So many pols have promised -- and repeatedly failed -- to reduce the number of these pesky, persistent bodies that always seem to be expanding, poking into every aspect of our lives, spending billions of our tax dollars, then demanding more money and power to snoop into every aspect of our lives).
Regulatory Nonsense
The latest effort in regulatory nonsense comes from the SEC’s William Donaldson. He is outraged that Big Board’s chairman, Dick Grasso, was allowed to cash out a some $140 million long term-compensation package as part of a deal that keeps him on the job until the year 2,007. Donaldson apparently was shocked that Grasso makes so much money. Amazing.
Donaldson once headed the NYSE and had Grasso as his deputy. Why should Donaldson suddenly act like the Claude Rains character in the movie Casablanca. “I’m shocked! Shocked! Gambling is going on here,” he says as his closes down a nightclub and proceeds to accept his winnings. “Oh, thank you very much,” he says as he grabs the money he just won at the roulette wheel and directs the closing of the club.
Donaldson, a longtime Wall Street veteran, nevertheless is the reincarnation of the Claude Rains character. In a letter to two NYSE committees, Donaldson fumes that Grasso’s compensation, “raises serious questions regarding the effectiveness of the NYSE current governance structure.” No, it raises “serious questions” about whether the SEC understands markets and how talent is attracted to work in them.
Finding Wrongdoing
Isn’t it strange that Donaldson is making regulatory judgments about someone who once worked for him? And here is a greater regulatory anomaly. SEC officials, who have hinted that they might find some wrongdoing at the NYSE compensation committee, have said that they don’t want to start telling exchanges how much they should pay their executives.
Still, by suddenly making a fuss over Grasso’s pay, they are doing exactly that. Further, Donaldson has been on the job for several months, why is it he is only now finding these pay practices suspicious and possibly even objectionable? Why couldn’t he have said something about this subject during his confirmation hearings? Value is subjective, not objective. One man’s French champagne is another man’s Colt 45.
An Overpaid Executive?
Dick Grasso may well be overpaid. Don’t ask me, I gulp Colt. On the other hand, I don’t object to people who overpay for something. It’s their money, not mine, isn’t it? Then again, so may rock stars, baseball players as well as the aggravating bureaucrats and pols who run our lives in these formerly free United States may also be overpaid. Who knows? I may be getting too much dinero for writing this column. Still, is it anyone’s business other than yours truly and my employer’s?
Grasso obviously has been champagne for many NYSE members. And his pay is an issue for those who own the Big Board to decide. They obviously like him because he has kept the specialist system alive and profitable. Are the regulators -- in their haste to grab another headline -- considering that? I wonder.
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Gregory Bresiger is assistant managing editor at Traders Magazine. |
