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.

The Journal is reporting that it is not known whether any Spear, Leeds traders bought AIG shares in response to the appeal.

One role of a New York Stock Exchange specialist is to maintain an orderly market in the securities registered to the specialist. Specialists are supposed to buy and sell shares of the securities that they handle to compensate for temporary gaps between supply and demand.

Representatives for the U.S. attorney and Spear, Leeds declined to comment on the Journal account, and AIG spokesman Joseph Norton says the U.S. attorney’s office has not contacted Greenberg about the stock price allegations.

Greenberg has said publicly that New York Stock Exchange floor traders have an obligation to buy his company’s stock to help stabilize its price during times of volatility, according to a statement by AIG General Counsel Ernest Patrikis.

AIG’s stock price fell after the company announced plans to buy American General, but Greenberg did not try to manipulate AIG’s stock price, Patrikis stated.

AIG stands by the Patrikis statement, Norton says.