The Wall Street Journal says federal officials are looking into the possibility that a top insurance company executive tried to manipulate the price of his company's stock.[@@]
The U.S. attorney's office in the Southern District of New York is investigating allegations that AIG Chairman Maurice Greenberg asked Richard Grasso, then head of the New York Stock Exchange, to help prop up AIG's stock price to ease AIG's proposed acquisition of American General Corp., Houston, according to the Journal account.
AIG agreed in 2001 to pay for American General with about $23 billion in AIG stock.
AIG won out over a competing suitor, Prudential P.L.C., London, partly by agreeing to a "collar" that would shore up the total value of the deal even if the price of AIG's stock fell.
Greenberg feared that a falling stock price would force AIG to pony up more shares to pay for the acquisition, according to the Wall Street Journal.
The Journal says Grasso's office contacted traders working for the specialist operation at Spear, Leeds & Kellogg L.P., a unit of Goldman Sachs Group Inc., New York, to let them know of Greenberg's appeal.
