Senator calls for probe of deal giving Dubai stake in Nasdaq

NEW YORK — A senator called Thursday for a review of a deal that would give Dubai's state-owned stock exchange control of nearly 20 percent of Nasdaq, home to many top U.S. high-tech companies.

Under a complex three-way deal, the Dubai stock exchange would acquire a 19.9 percent stake in Nasdaq, becoming the first government in the Middle East to own a substantial interest in a U.S. exchange.

Sen. Charles Schumer, D-N.Y., who heads the Joint Economic Committee, called on Treasury Secretary Henry Paulson to investigate the deal. "At this early stage, this deal gives me pause," he said.

Schumer said the Dubai exchange "is majority owned and controlled by the government of Dubai, which has previously been cited as a nexus of terror financing, money laundering and a potential crossroads for shipping and trading for Iran in their quest for nuclear materials and technology."

The deal recalled the attempt by Dubai Ports World to control operations at terminals at several major U.S. seaports last year.

The proposal set off a political backlash among critics who did not want any part of U.S. border security in the hands of an Arab government. The company abandoned the plan.

Nasdaq President Robert Greifeld said Thursday the deal includes safeguards that should address lawmakers' concerns. Nasdaq's corporate charter, he said, limits the voting rights of a shareholder to 5 percent.

The proposal, which gives the Dubai exchange two of Nasdaq's 16 board seats, prevents Dubai from raising its stake for 10 years.

Under the deal, the Dubai exchange would also take a 28 percent stake in the London Stock Exchange and Nasdaq would control OMX, a stock exchange based in Stockholm.