The procedural tug-of-war in Spitzer v. Grasso continues.

New York Attorney General Eliot Spitzer filed court papers Monday with a federal judge seeking to move the lawsuit he filed in May against former New York Stock Exchange boss Richard Grasso back to state court.

Spitzer contends the lawsuit challenging Grasso's enormous $190 million pay package doesn't belong in federal court because the dispute centers around a state law governing charitable organizations.

Grasso's lawyers had the case transferred to a federal court in New York, claiming the lawsuit raised a federal issue, since the NYSE is regulated by the Securities and Exchange Commission. The former Big Board chairman also claimed that NYSE officials had "immunity'' from state prosecution.

In the lawsuit, Spitzer seeks to force Grasso to return much of that pay package, claiming the NYSE board was misled into approving it. The lawsuit also names as a defendant Kenneth Langone, Grasso's friend and a former NYSE board member, who had led the Big Board's compensation committee.

Spitzer contends moving the case to federal court is inappropriate because there is nothing in federal law that "permits Grasso to receive $190 million'' in compensation.

"While the regulatory function of the NYSE is subject to federal supervision, there is no federal oversight with regard to the NYSE's award of compensation to its directors and officer,'' the court papers contend.

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