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King of the Club
Richard Grasso and the Survival of the New York Stock Exchange

Chapter One

It's Good to be King

September 11, 2001, started out as a typical late-summer day in New York. More than 350,000 people filed into the lower Manhattan financial district on a bright, sunny morning when tragedy seemed to be the furthest thing from anyone's mind. Grasso arrived at the office that morning at his usual time, 7:00 A.M., prepared to ring the opening bell with executives from Bergen Brunswig Corporation, a pharmaceutical company that was listed on the exchange, but first he went through the newspapers, and as always he had CNBC on the tube. Company officials were already in the exchange, assembled in the dining hall. By now Grasso had established a certain ritual for all companies he convinced to pay a fee of as much as $500,000 annually to have their shares listed to trade on the New York Stock Exchange; company officials and his senior staff would attend an elaborate breakfast where Grasso would extol the virtues of the world's greatest stock market. From there it was off to ring the opening bell, where companies would be treated to one of the greatest PR stunts in corporate America.

At around 8:50 A.M., Grasso was running late, attending to some housekeeping items in his office and watching CNBC's Squawk Box morning show, when he received a call from one of his top officials, deputy enforcement chief David Doherty, whose job it was to make sure trading at the exchange was done legally. Grasso loved to hire former law enforcement officials: his driver was a former cop; his security guards wereex-NYPD vets as well. Doherty had served in the CIA before coming to the exchange a few years earlier to work under enforcement chief Ed Kwalwasser, himself a former SEC attorney. Part of Grasso's recent battle with City Hall had been to get New York City mayor Rudy Giuliani to use city funds to expand the exchange's historic headquarters on the corner of Wall and Broad streets to accommodate all five thousand of its employees and stock traders.

There had been some testy moments in the negotiations. Giuliani had all but accused Grasso of being greedy; Grasso had told Giuliani he was giving the exchange, the anchor of the lower Manhattan economy, short shrift. But Grasso had won concessions from the mayor, and he was in the planning phases of building a new high-rise across the street at 33 Wall. In the meantime, Doherty and his enforcement staff were scattered throughout various locations in downtown Manhattan, including the north tower of the World Trade Center, where Doherty was reporting what looked like a bizarre accident: the Port Authority of New York and New Jersey, the state agency that owned the twin towers, was alerting tenants that a small plane had hit the top floors of the north tower.

Doherty said he wasn't overly concerned. In fact, the word from the authority brass was to stay calm and that under no circumstances should people be evacuated. That's when Grasso noticed something on CNBC. The business station had a remote camera located just across the Hudson River and zoomed into the area of impact. Huge clouds of black smoke and flames could be seen shooting from the top floors of the 110-story edifice. Grasso wasn't an expert on plane crashes, but he knew this was more serious than some hang glider flying into one of the country's and the world's tallest buildings. "Dave," he said with his eyes glued to the screen, "this is no small plane, get them out now."

The exchange had 140 people on the third floor of the north tower. All of them left promptly except one, a security guard named Oliver Smith, who wanted to make sure a quadriplegic enforcement attorney had made it out alive. Grasso, meanwhile, canceled his listing breakfast and alerted his staff that he was going to walk over to the trade center to see what was happening.

At the corner of Wall and Broadway, Grasso noticed that the sky was filled with white ash, smoke, and flames. He went no further because his chief of security, James Esposito, grabbed him from behind. "Hey, you can't go over there," Esposito said. Esposito is an imposing man with wire-rimmed glasses who had spent most of his career, more than twenty-five years, as an FBI agent. He had just received a report that a second plane had crashed into the south tower. And things were worse, at least according to the reports Esposito had been given. These were no accidents. They were a concerted effort on the part of terrorists.

Grasso now got a clear view of the trade center. It reminded him of a tree that had been chopped with an ax. All four sides of both towers were now blackened with smoke and engulfed in flames. "This ain't no small plane," he repeated to Esposito.

"We've got to get you out of here," Esposito responded.

Grasso and Esposito couldn't believe their eyes; throngs of people, men in their suits and women in their high heels, running for cover as the towers burned. The two hightailed it back to the exchange. Grasso was fifty-five years old, but he ran as if he were twenty-five. By now the word was out on the street—literally—that large jets had crashed into the trade center, and it was an attack by terrorists, probably Muslim extremists. A massive crowd assembled on Broad Street, many of them employees and traders of the exchange, staring in the direction of the trade center, watching the carnage.

As events unfolded that morning inside the trading rooms and on the streets of lower Manhattan, chaos ruled. People watched in horror as bodies began falling from the twin towers. Most, like Grasso, ran for their lives, ducked into stores, or hid under cars and trucks to escape the falling debris. A few looked for ways to make money.