Pressure is mounting on Richard Grasso, the former head of the New York Stock Exchange, over $140m (£77m) he has received in deferred pay and benefits.
Mr Grasso insists his money was justly earned
The exchange's board has asked the Securities and Exchange Commission and New York's attorney to pursue the case.
Mr Grasso resigned over the pay deal last September, despite claiming he was owed the money for 36 years of service.
Exchange members and regulators have been angered by the deal, however, arguing it was hugely over-generous.
The board's decision follows a reading of a report into the affair.
In a letter accompanying the report, interim chairman John Reed the board had 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 that led to the compensation excesses as well as other injuries."
The exchange has suffered in recent years from increased competition, as well as the decline in stock-market investment, and some argue that Mr Grasso has not managed it well.
Although the compensation package represented accumulated pay and benefits going back years, it was widely seen as inappropriate at a time when corporate America was being asked to behave more responsibly.