The Securities and Exchange Commission says it may want to read Dick Grasso’s outgoing e-mail to find out just how much pressure the ousted former New York Stock Exchange boss put on floor traders.
The agency has asked the Big Board to make available three years’ worth of Grasso’s e-mails, in a move believed to be part of an investigation into whether Grasso exercised any improper influence over traders, say people who have been briefed on the matter.
The NYSE is currently examining whether Grasso pressured Spear, Leeds & Kellogg to buy additional shares of insurance giant American International Group after receiving written complaints from AIG Chairman Maurice “Hank” Greenberg.
Regulators are believed to have in their possession e-mails from Greenberg to Grasso, say the people familiar with the situation. Grasso’s e-mails could shed light on what kind of pressure he might have exercised.
The SEC has also requested that the e-mails of two other unspecified high-level NYSE officials be made available, say the people familiar with the investigation.
An NYSE spokesman declined to comment. An SEC spokesman said, “We don’t comment on investigations.”
As chairman of the exchange, Grasso should not have pressured the specialists to support a stock beyond the specialists’ obligation to create an “orderly market” in that stock.
Specialists are at the heart of the exchange’s trading system, buying and selling stocks on the floor in such a way as to minimize share volatility.
They are obligated to use their capital to buy stock if other people are selling, and they are required to sell when investors are trying to buy.
The case with Greenberg is particularly intriguing because Greenberg was once an NYSE director and member of the board’s compensation committee, which approved the jumbo pay package that ultimately led to Grasso’s ouster.
The request for the e-mails to be made available also comes at a time when the Big Board’s leading specialists are mired in an investigation into improper trading practices.
The Big Board has told five of the leading specialists that they will be fined for “interpositioning” – stepping in between customer orders – and trading ahead of customer orders.
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E-MAIL TRAIL
The SEC wants Dick Grasso’s e-mails made available – apparently for its probe into whether the former NYSE boss tried to influence trading of AIG shares.