|
NEW YORK (CNN/Money) -
Former American International Group Chairman and CEO Maurice "Hank" Greenberg ordered one of his company's traders to buy 250,000 of its sinking stock on the day the insurer disclosed it had received regulatory subpoenas into its accounting, according to a published report Wednesday.
The Wall Street Journal reported Wednesday that Greenberg's order in the minutes before the market close Feb. 14, as well as two others by since-ousted chief, are the subject of state and federal probes. The paper quoted a legal expert as saying the late order raises the question of whether Greenberg sought to manipulate AIG's share price.
The paper reports that the AIG (Research) trader told Greenberg the transaction could be viewed as improper because it was too close to the market close. Companies are safe from shareholder litigation when buying their stock if certain guidelines pertaining to the size of the order, time of the trade, price and execution are followed. But those so-called "safe harbor" protections disappear in the last 10 minutes of trading.
Greenberg ordered the trader to make the purchase, despite those rules and his objections, the paper reported. But the New York Stock Exchange trading floor apparently refused to accept the order, according to the Journal.
An AIG spokesman told the paper it is cooperating with the probe. A spokesman for Greenberg, who left the company in March, said he couldn't comment.
Before the market open Feb. 14, AIG announced Securities and Exchange Commission and state regulators had issued subpoenas to the company seeking information on its accounting . It prompted heavy trading in shares of the Dow component.
The AIG stock closed down $1.63, or 2.2 percent, that day to $71.36. Greenberg was trying to keep the closing price above the $73 level in ordering the trade, according to the Journal.
The paper also reported Wednesday that New York regulators have proposed overhauling rules for the accounting of nontraditional reinsurance transactions such as those at the center of AIG investigation. The proposed change would focus in on reinsurance deals that appear to transfer little, if any, risk to reinsurers, according to the report.
For more on corporate scandals, click here.
|
