AIG Mum On Greenberg Subpoena Report
By Michael Ha
NU Online News Service, March 12, 3:36 p.m. EST?The Securities and Exchange Commission, in its probe into stock-trading practices at the New York Stock Exchange, has reportedly issued a subpoena seeking testimony from American International Group Inc. Chairman and Chief Executive Maurice Greenberg.[@@]
The SEC is investigating whether former New York Stock Exchange Chairman Dick Grasso had applied "unusual pressure" to NYSE's trading-floor specialist firm to buy more AIG stock and boost its sagging price after getting complaints from Mr. Greenberg, according to a report by The Wall Street Journal.
In addition to Mr. Greenberg, the SEC has reportedly issued subpoenas to Mr. Grasso as well as to some individual NYSE floor specialists who had traded AIG shares on behalf of their firm, Goldman Sachs Group Inc.'s Spear, Leeds & Kellogg.
John Heine, an SEC spokesman, declined to confirm the report, saying the agency does not comment on its ongoing investigations. AIG also declined to rebut or deny the report, but said Mr. Greenberg had previously expressed his "disillusionment" with the NYSE's floor-specialist arrangement.
"Mr. Greenberg has made his disillusionment with the specialist system clear and unequivocal," said the AIG spokesperson. "Mr. Greenberg has said, ?If companies believe that their specialists fail to perform this role as required under NYSE rules, they have an obligation to their shareholders to speak out. If that does not work, we should consider changing the system.'"
AIG also stated that Mr. Greenberg had chaired a subcommittee on the role of the specialist at the NYSE, which looked into whether specialists have the capital required to maintain orderly markets in large-cap stocks.
Specialist firms act as referees on the NYSE trading floor, matching buy-and-sell orders from investors. When there is disagreement over price, they are required to use their own capital to facilitate orderly trading.
"He has spoken out on the shortcomings of the specialist system on numerous occasions," said the AIG spokesperson.
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