Grasso accused on NYSE trades

AMERICA'S Securities and Exchange Commission is examining allegations that former New York Stock Exchange chief executive Dick Grasso tried to manipulate trading at the exchange.

The claims came as NYSE interim chairman John Reed was poised to unveil a reform plan to restore credibility to an institution many regard as unacceptably clubby and badly run.

According to the Wall Street Journal Grasso is said to have lobbied Goldman Sachs unit Spear, Leeds & Kellogg to increase its purchasing of shares in insurer American International Group after AIG chairman Maurice Greenberg complained that trading in his firm's stock was too volatile.

Greenberg was on the NYSE's compensation committee whose decision to award Grasso a $187m (£110m) pay package provoked uproar and led to Grasso's ousting in September.

Reed's plan to revive the exchange's reputation centres on splitting its board into an executive board of about six industry representatives and a 'regulatory' board of up to 18 independent outside directors.

While the executive board would oversee day-to-day trading and the operation of the market, the regulatory board would control regulation, executives' pay and other issues.

Members vote on the plan on 18 November.