The end of his 35-year career at the world’s biggest stock exchange looks set to end with his biggest show of all: a courtroom scrap that is dragging the reputations of some of Wall Street’s finest through the mud.

Grasso’s reign as chairman of the Big Board from 1995 to 2003 coincided with the biggest period of wealth creation for a generation. Bankers, brokers, dotcom moguls — even investors — were making a killing. And so was Grasso. In 2003, the exchange revealed that Grasso’s pay package was worth $139.5m (£74m).

It was an enormous sum for anyone — but particularly for a civil servant running an entity closer to a public utility than an investment bank. President George Bush receives $400,000 a year, Dick Cheney, the vice-president, earns $198,000. Grasso’s personal assistant got $240,000 a year. His two drivers each received $130,000.

When the pay deal was made public in September 2003, Grasso was forced to resign. He maintains he is entitled to the cash and is suing for a further $48m he says he is still owed. New York attorney general Eliot Spitzer is suing Grasso for $100m and the former head of the NYSE compensation committee, Ken Langone, for $18m. Spitzer’s suit was based on an internal report compiled on the debacle.

Last week the NYSE released the report, after a judge’s order that it be turned over to lawyers for Grasso and Langone, who said they needed it to defend themselves. The Big Board had refused to release it publicly, with chairman John Reed explaining last year that it was embarrassing. The real embarrassment may be yet to come.

So far the report seems to be all things to all people. Spitzer, Grasso and Langone are all claiming the report backs their judgment. Both sides are adamant that the case is heading for court.

Compiled by Dan Webb, a former federal prosecutor and exchange lawyer, the report is a damning indictment of the exchange under Grasso. The contents page is peppered with the words “excessive”, “failure” and “faulty” and while it is hard on Grasso and the exchange, it falls short of naming names. In court, lawyers will be less diplomatic.

Last week lawyers for Langone said the report showed their client had done his job, keeping board members informed of what was going on.

Langone, a co-founder of DIY retailer Home Depot, was even more clear-cut in his defence last year when he told Fortune magazine: “They got the wrong f*****g guy. I’m nuts, I’m rich, and boy, do I love a fight. I’m going to make them s**t in their pants. When I get through with these f*****g captains of industry, they’re going to wish they were in a Cuisinart (food processor) — at high speed. If Grasso gives back a f*****g nickel, I’ll never talk to him again.”

Grasso and Langone’s representatives are now pushing to know why Carl McCall, a prominent Democrat like Spitzer, has not been sued. McCall headed the compensation committee in 2003 when it approved Grasso’s most lucrative contract.

Corporate-governance expert Charles Elson of the University of Delaware said that, for all the heat being generated on side issues, the report’s main findings were indisputable. “It says the level of pay was improper. Who knew what, and when, is going to be fought out in court, but the basic fact is that the report says Grasso was excessively overpaid.”

The report claims Grasso received $144m to $156m in excessive compensation. His pay was derived from a comparison with the bosses of Wall Street’s banks. But while the bankers were risking billions in investments and were compensated in volatile share options, Grasso was, to all intents, a public servant and received his bonuses in risk-free cash.

The huge sums were passed by a committee of Wall Street nabobs who never seemed to notice the payments were completely out of line with Grasso’s true peers in other exchanges, regulatory and government agencies. This was due, said Webb’s report, to Grasso’s “unfettered authority to select which board members served on the compensation committee”.

Grasso picked people who were themselves highly paid, and with whom he had close ties, said Webb. In one case an unnamed executive told the exchange boss he did not have the time to devote to serving the NYSE. Grasso assured him he did not have to attend all the meetings “and it would not be that much work”. As the case heads to court, those executives may find the work has just caught up with them.

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