NEW YORK (Reuters) - Kenneth Langone, a former director of the New York Stock Exchange, is attempting to mount a counter bid to buy the exchange, a source close to the matter said Monday.

The Langone offer threatened to disrupt the NYSE's proposed takeover of Archipelago Holdings Inc., an agreement that would also take the venerable exchange public in a deal likely to top $1 billion, based on Archipelago's market value.

The offer could be viewed as "payback" for Langone, who is being sued by state regulators for his role in former NYSE Chief Executive Dick Grasso's alleged excessive compensation.

Langone was exploring ways to make an NYSE bid, according to the source, who could provide few details other than to say he was only looking at NYSE and not at Archipelago.

Shares of Archipelago (Research) fell 8.43 percent during late Monday trading on the Pacific Stock Exchange.

A Langone spokesman and an NYSE spokesman, Ray Pellecchia, had no comment. A number of large Wall Street investment banks whose leaders sit on the exchange's board, also declined to comment.

Though some NYSE members and others suggested that Langone is getting back at the exchange and Goldman Sachs Group Inc. (Research), the investment bank that advised both sides of the NYSE-Archipelago deal, others said his bid might be viable.

CNBC reported that hedge fund manager Stanley Druckenmiller, a former strategist for George Soros who now runs Duquesne Capital Management, favored a bid by Langone, the chairman of investment firm Invemed Associates LLC.

A meeting was held at Druckenmiller's headquarters in Manhattan on Monday to discuss the plan, Newsweek reported. Former Credit Suisse First Boston CEO John Mack has been asked if he would like to run the NYSE, the magazine said.

Langone quietly reached out to a number of Wall Street executives last week, asking them if they would be interested in a counter bid, The Wall Street Journal reported.

"It's always good to have a second bidder and a third bidder and a fourth bidder," said Bill Higgins, chairman of the Association of NYSE Equity Members, or its seatholders.

"If I found a Rembrandt in my attic, I wouldn't sell it at the curb, I would take it to Christies and ask them to auction it. We have a Rembrandt in the stock exchange and we should put it up for the public to know we are for sale," he said.

NYSE member Lester Dembitzer, who bought his seat in August for $1.3 million in anticipation of an IPO, said he was open to any kind of offer, though he had not heard from Langone.

But he doubted the sincerity of the offer, or that Langone has the wherewithal to make it succeed.

"Langone is unhappy. He is not pleased that Goldman Sachs, a competitor, came in there and accomplished the transaction. I don't really know what his motives are, but I'm sure part of it is anger," Dembitzer said.

A former seatholder said Langone was putting his interest before the exchange's, and he wondered if the bid was an attempt to rile Goldman Sachs Chairman and CEO Henry Paulson.

When the issue of Grasso's pay flared into a scandal in 2003, Langone stuck by the former NYSE CEO, while other directors, including Paulson, took the other side.

"I don't know if he really cares about what is going on or that he just wants to give aggravation to Paulson," said the person, who spoke on the condition of anonymity.

Langone's offer is likely to cause problems for the NYSE going forward, said Richard Moore, the state treasurer of North Carolina who sits on the exchange's executive board.

Moore said the NYSE enjoys benefits and special protections by Congress, which might question where the investor stands in a profit-driven institute that would now answer to shareholders.

The fact Goldman Sachs represented both sides, though legal, will be questioned, and the valuation put on the stock market also deserves a closer look, said Moore, whose role at the exchange is to examine trading issues.

"There are a lot of concerns and a lot of issues that must be dealt with before this is final," he said.

"This is partially payback for the way (Langone's) been treated," Moore said of the offer, which might hold merit. "If you're purely in a fiduciary position, don't you have to sell out to the best deal possible? Who's to say that Ken Langone's offer is not better than the one put on the table last week.

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