Former New York Stock Exchange Chief Dick Grasso pressured a specialist firm to purchase more shares of American International Group after the insurance companys head complained about the stocks volatility, The Wall Street Journal reported Friday
In a letter to Grasso, AIG Chairman Maurice "Hank" Greenberg complained that Spear, Leeds & Kellogg, the specialist firm owned by Goldman Sachs, was not committing enough of its own money to buy AIG shares. Subsequently, Grasso told Spear to step up the number of buy orders on the stock to prevent AIG from moving his company to a rival exchange, the newspaper said. As a result, Spear suffered roughly $14 million in trading losses over the past couple of years.
AIG is one of the largest stocks on the Big Board, and Grassos actions raises questions as to his relationship with Greenberg, who, coincidentally, served as a NYSE director and member of the boards compensation committee.
Grasso was forced to resign last month amid an uproar over his acceptance of a $187.5 million deferred compensation and retirement package.
Edward Kwalwasser, executive vice president for regulation at the NYSE, told The Journal he had no knowledge of any discussions between Grasso and the specialist. "As the specialist, we commit capital to facilitate orderly trading and this involves the assumption of risk. We do this for all our clients," Goldman said in a statement.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.