Shares of AIG soared more than 7 percent in less than 15 minutes yesterday, just moments after Attorney General Eliot Spitzer said his probe into the insurance giant was now likely to end with civil and not criminal charges.
The shares had dropped 20 percent since mid-February as longtime CEO Hank Greenberg came under fire and was eventually pushed out of the company he headed for nearly 40 years.
As state and federal investigators circled their wagons full of subpoenas, investors ran for the hills fearing the worst.
On April 1, AIG shares hit a two-year low. No financial services firm has ever survived a criminal indictment.
So Spitzer, after seeing AIG’s market capitalization drop by $57.6 billion – and after gaining the cooperation of AIG’s new brass – told investors criminal charges were not likely.
“We believe that a civil resolution with the corporation will ultimately be achievable,” Spitzer said in a statement.
The state lawman said he based his statement on the fact that “the board and current management of the company are now cooperating with this investigation” and on “knowledge” his office has learned so far in the probe.
The Securities and Exchange Commission, the Department of Justice and the state Insurance Dept. are also delving into the insurer’s operation.
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The Spitzer effect
AIG (stock chart)
1:33 p.m.: Spitzer says a “civil resolution” with AIG will be possible
Close: $53.30 (+2.35)