NU Online News Service, May 6, 4:25 p.m. EDT–Federal prosecutors are looking into allegations that former American International Group Chairman Maurice “Hank” Greenberg tried to manipulate the company stock price, the New York Times reported this morning.
According to the account, an executive in the AIG trading group reported that Mr. Greenberg instructed a trader to buy AIG stock as the price was falling earlier this year.
The conversations between the trader and CEO were recorded, tapes of which were turned over to both federal prosecutors and the Securities and Exchange Commission, the newspaper reported.
A spokeswoman for the U.S. Attorney’s Office for the Southern District declined to comment, as did Mr. Greenberg’s press spokesman.
“We cannot comment because we don’t have the tapes, transcripts, nor the substance of the conversation contained on them,” Howard Opinsky told National Underwriter.
Federal prosecutors have since subpoenaed all of AIG’s recordings from its trading group.
Mr. Greenberg already faces charges in connection with the investigation conducted by New York Attorney General Eliot Spitzer in connection with allegations of accounting fraud stemming from the use of finite reinsurance products.
Ever since his resignation from the day-to-day operations management of the company, followed by his ouster as chairman, the relationship between Mr. Greenberg and the company he built into a major powerhouse has been increasingly adversarial. And now the injection of federal prosecutors into the probe will in all likelihood widen the gulf.
Standard & Poor’s insurance director Steve Dreyer said that it is obvious that the paths of AIG and Mr. Greenberg have become increasingly divergent. “But we have not factored anything into our ratings that might happen to Mr. Greenberg other than anything that might be tied into his ongoing relationship” with the three Starr interests, which includes a philanthropic association.