Eliot Spitzer and the US Justice Department are trying to determine whether Maurice “Hank” Greenberg tried to manipulate the share price of American International Group a month before he was ousted as chief executive.
The investigation, which was first reported by the New York Times, increases the chances Mr Greenberg could face criminal charges over his role in an accounting scandal at the world’s biggest insurer.
The New York state attorney general and federal prosecutors are examining an audio tape, which indicates Mr Greenberg placed a call to an AIG trader last February and asked him to buy shares in the insurer. The call came shortly after AIG shares began to fall after the company revealed regulators had opened an investigation into its accounting methods, a person close to the investigation said.
It is not illegal for a company to buy back its own shares, but certain regulations bar executives from doing so to boost the price of shares artificially.