Executive Times






2008 Book Reviews


King of the Club: Richard Grasso and the Survival of the New York Stock Exchange by Charles Gasparino








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Charles Gasparino has written an engaging book titled, King of the Club: Richard Grasso and the Survival of the New York Stock Exchange. In it, Gasparino chronicles the rise of Richard Grasso, his peak in reopening the NY Stock Exchange after the events of 9/11/2001, and his rapid fall when terms of his compensation became front page news. The story is either epic or operatic: the tragic hero dedicates himself to the success of his organization, and then crashes when the plots of others force him to leave behind his creation. Here’s an excerpt, pp. 141-3:



But back at the exchange another scandal was brewing. What had begun as a mere nuisance was now turning into something much ug­lier. For years Hank Greenberg, the volatile CEO of AIG, had been badgering Grasso and his specialist for better pricing on his stock. Grasso had never met a CEO who wasn't obsessed with his stock price. For a time, Sumner Redstone, the chairman of Viacom, rivaled Greenberg in this department. Like AIG, Grasso had stolen Viacom from a rival exchange. But it wasn't long before he began having second thoughts. Redstone complained incessantly about his specialist until Grasso placed Mel Karmazin, Redstone's number two, on the board of the exchange. The complaints didn't stop, but they began to lose their intensity.

Grasso had no such luck with Greenberg; who gave the word “obsession" new meaning. Greenberg was approaching eighty, but he was like no other eighty-year-old man Grasso had ever known. Greenberg worked out incessantly with weights and a stationary bike that kept him lean and mean. But he scared the hell out of Grasso with his expletive-laced tirades about the pricing of his stock and his threat that he would return to the Nasdaq if the AIG specialist didn't start doing a better job.

Grasso did all he could to appease Greenberg. Greenberg told Grasso he believed AIG had outgrown the exchange; the stock was too big to be handled by some guy on the floor. Only a computer could make the stock trade at a more accurate, loftier level. With that, Grasso began investigating Greenberg's complaints in a more direct way, asking for details about trading positions directly from AIG's specialist on the floor, a man named Todd Christie, just to see if Greenberg's harping had any merit.

News of Greenberg's pressuring Christie, a specialist for Spear, Leeds & Kellogg, soon spread through the floor, particularly as Grasso was spotted more and more over at Christie's station discussing AIG. Grasso was walking a tightrope: if he didn't keep Greenberg happy, he could lose a valuable listing. AIG was one of the biggest stocks in the world, one of the most actively traded on the floor.

But Grasso couldn't just order Christie to create an "unnatural floor" and bid up AIG's stock price. The securities laws were pretty straightforward on this count: the job of the specialist was to keep prices stable, not to satisfy management. If Grasso pushed Christie to bid up shares, he would have violated exchange rules and commit­ted securities fraud. If Christie agreed, both of them could end up in jail.

Whether Grasso crossed the line was an open question at the exchange as Greenberg stepped up his demands. Grasso maintains he never told Christie what to do, other than to "do the right thing." Floor traders, though, say his mere presence on the floor, asking about the pricing of the stock, was problematic.

One morning Greenberg wanted to send a message to Grasso as well. AIG was in negotiations to purchase another insurance com­pany, using its stock as currency, so the last thing Greenberg wanted was a falling stock price that would jeopardize the deal.

Grasso's secretary SooJee Lee, was often the first to receive Greenberg's calls. Lee wasn't merely a secretary, she was also Grasso's gate­keeper, deciding which calls Grasso needed to answer and which ones he could ignore. There was no ignoring Greenberg, however. Lee re­ceived so many calls from the AIG chief, in fact, that she came up with a nickname for the AIG chief: "Mr. Yoo-hoo." Lee was out of the office when she retrieved the latest message. She called one of Grasso's assistants and told her to transcribe the following: "Hank Greenberg is not looking for AIG to go under $76.50 or the deal won't go through."

The deal went through, but the complaints continued. "Mr. Yoo-hoo" was on the telephone again and again, badgering Lee about how Christie priced his stock, demanding information about his trading positions, and generally driving Christie mad. Christie was one of the most prominent traders on the floor and a partner at Spear, Leeds. Langone once described the specialist business as "license to steal, but somehow Christie had figured out a way to lose money with AIG amid the complaints from Greenberg.

Christie e-mailed Lee to tell her he would deliver his long and short positions in AIG to "Mr. Yoo-hoo" by the end of the day, noting that "Mr. Greenberg is a bad man."

"I think he's not happy in general," Lee said. About ten minutes later Christie said, "Neither am I."

Grasso maintains that he constantly reminded Christie not to "do anything stupid" when it came to his dealings with Greenberg, who, for all his complaints, remained at the exchange, probably figuring he had a better chance at getting good pricing for his stock by badgering Grasso and Christie than he would by moving to the Nasdaq. And while Christie couldn't stand being near the old man from AIG, his relationship with Grasso was as strong as ever. Grasso would eventu­ally appoint Christie to his board.

It wasn't bad having Grasso as a friend, unless, of course, the price of his friendship was having Hank Greenberg as a client. Christie kept a photo of Greenberg at his specialist post, right next to a photo of his dog. When Grasso first saw the photo, he couldn't stop laughing, particularly after he heard Christie trying to defuse a par­ticularly nasty call from Greenberg by saying, "Hank, I love you as much as my dog."


There’s a gossipy tone on many of the pages of King of the Club that will attract the attention of those readers looking for more of the inside story. Grasso is a charismatic salesman, and Gasparino captures his qualities in a way that will resonate for many readers, and shows the vulnerability that all leaders have when tides turn. Gasparino’s insight into Grasso’s flaws as well as his skills makes King of the Club an insightful book for readers.


Steve Hopkins, February 21, 2008



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The recommendation rating for this book appeared

 in the March 2008 issue of Executive Times


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