The Webb Report summarizes and analyzes the information developed in the course of the internal investigation of the decisions that led to the resignation on Sept. 17, 2003, of Richard A. Grasso as Chairman and CEO of the Exchange and the appointment of John S. Reed as Interim Chairman and CEO. In one of his first actions, Mr. Reed engaged Dan K. Webb, former federal prosecutor and a partner of Winston & Strawn LLP, to conduct the investigation, which started on Sept. 24 and concluded in mid-December. The investigation involved interviewing more than 60 individuals.
In a letter to the SEC and the New York Attorney General transmitting the report, Mr. Reed said the Board, excluding three directors (two of whom were recused due to their brief service on the previous board and one who is ill), had reviewed and discussed the report, concluding that "serious damage has been inflicted on the Exchange by unreasonable compensation of the previous Chairman and CEO, and by failures of governance and fiduciary responsibility that led to the compensation excesses as well as other injuries." The letter also said: "While we believe that you are more capable of pursuing the matter than the Exchange itself, we assure you that we will participate or cooperate in any way that is appropriate."
The Exchange referred the matter to the SEC in recognition of the SEC's regulatory oversight of the Exchange mandated by the federal securities laws, under which the Exchange is registered as a national securities exchange and acts as a self-regulatory organization. The referral to the New York Attorney General recognizes the Attorney General's special authority under the New York Not-for-Profit Corporation Law, under which the Exchange is incorporated.
