Speculation Rises About Greenberg
By Daniel Hays
NU Online News Service, March 14, 9 :36 a.m. EST?Speculation that American International Group Chief Executive Maurice Greenberg’s tenure at the top was ending exploded today as the company remained the focus of attention by investigators.[@@}
In reaction to reports in The Wall Street Journal and The New York Times that Mr. Greenberg could be on his way out, Morgan Stanley Equity Research put out a bulletin today suggesting that his resignation could lead to “prolonged weakness” in the company stock.
AIG stock tumbled 2 percent on Friday to $64.71, after analysts began guessing that heat from investigators looking at his company’s activities was the reason Mr. Greenberg may have bailed out of a Webcast Thursday night. The Times reported today that Mr. Greenberg had retained criminal defense attorney Robert G. Morvillo.
Friday there was speculation by an analyst group, which guessed that “regulatory activity” was the reason Mr. Greenberg and other company executives abruptly cancelled a client meeting hosted by Goldman Sachs & Co.
The 6:30 p.m. session that was due to be aired over the Web was “postponed” the company said in an announcement, which gave no reason for the action.
AIG also said that a similar session due to be held Tuesday with J.P. Morgan Securities was also delayed. No future dates were listed for either session. The AIG board, according to The Wall Street Journal, met yesterday to discuss Mr. Greenberg’s retirement.
UBS Investment Research in Reaction put out a note Friday saying that according to investor relations, lawyers had advised AIG against the meetings, and “we suspect this was due to the high probability of regulatory-related client questions–on which AIG would not comment.”
AIG activities are currently being examined by New York Attorney General Eliot Spitzer, the Securities and Exchange Commission and U.S. Justice Department. The probes have involved AIG involvement in alleged brokerage steering and bid-rigging as well as the company’s involvement in transactions that investigators believe can be used to smooth out financial results.
An AIG company spokesperson, asked to respond to the UBS note, said he could not comment beyond the announcement of the postponement. A spokesperson for Goldman Sachs also declined to comment.
UBS wrote that it cautioned against reading anything into the postponement and said the company’s action could not be used to gauge the direction of “pending regulatory matters.”
UBS said it had requested a client conference call with Mr. Greenberg to discuss regulatory issues and was told, “it would be inappropriate to address regulatory issues with us” (or on the postponed Webcast meetings).
Mr. Greenberg in the past in conference calls with analysts has been outspoken in defending his company and minimizing any damage from the efforts of investigators.
AIG’s comments concerning regulatory matters have in the past gotten the company in hot water. Last October the company revealed that the SEC had warned it was considering a lawsuit against AIG for putting out false and misleading press releases, one of them dealing with a U.S. Justice Department target notification.