The New York Stock Exchange has asked U.S. federal and state regulators to join its effort to recoup some of former Chairman Richard Grasso’s US$140 million payout, saying the “unreasonable” sum helped inflict serious damage on the world’s biggest equities market.

Both the New York State attorney general’s office and the Securities and Exchange Commission said in response to the request that they would co-operate in reviewing the matter to see if any securities laws or NYSE rules were broken.

The SEC’s investigation will seek to determine whether there have been violations of the federal securities laws or NYSE rules. The SEC says that this inquiry should not be construed as an indication by the commission or its staff that any violation of law has occurred.

The SEC will coordinate its investigation with the New York Attorney General, who will seek to determine whether there have been violations of New York laws governing New York nonprofit corporations.

The NYSE is undergoing the most sweeping changes in its 211-year history, prompted by controversy over Grasso’s paycheck and an ongoing probe into the trading practices of the specialist firms at the heart of the NYSE system.

Grasso, who became chairman of the NYSE in 1995, resigned in September after intense criticism over his pay package.

Grasso’s successor, Interim Chairman and Chief Executive John Reed, by leading a move to call in New York State Attorney General Eliot Spitzer and the SEC, has escalated the NYSE battle to pull back a portion of Grasso’s compensation.

In a letter to the SEC and Spitzer, Reed said the board determined 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.”

Grasso resigned in September under intense criticism of his pay package. He received $140 million in a one-time payment last August and later said he would forgo an additional $48 million owed to him.