UPDATE: AIG Delisting Notice Erroneously Posted On NYSE Site
July 01 2009 - 7:53PM
Dow Jones News
A notice of suspension and delisting for American International
Group Inc. (AIG) was erroneously posted on the Web site of the New
York Stock Exchange for three hours Wednesday, a day when shares of
the insurer lost more than a fifth of their value following a
reverse stock split.
The exchange, part of NYSE Euronext (NYX), took down the notice
at 3:31 p.m. EDT after the insurance company brought the matter to
its attention. NYSE said in a press release that it regretted the
error and that AIG is not subject to suspension and delisting.
The erroneous notice was generated by an automated feed that
draws on different status items, such as stock prices. An NYSE
spokesman said that the system misread the 1-for-20 reverse stock
split that went into effect after AIG shareholders approved the
move late Tuesday.
"It generated a flag that indicated the company was up for
suspension," the spokesman said.
It's unclear what it was about the reverse stock split that had
triggered the notice. During a reverse stock split, the old
security is suspended from trading at the same time the new one
begins trading.
An AIG spokeswoman said, "Our understanding is that this was an
NYSE systems error."
The exchange typically issues delisting or suspension notices
when a company's stock falls below $1 a share for an extended
period or if its market capitalization drops below $25 million. It
eased those rules amid the economic downturn as once-healthy
companies saw their share prices plummet.
The errant notice didn't appear to have a significant impact on
trading in AIG shares Wednesday. The stock was already down 20% by
the time the notice was posted. AIG shares closed down 22% at
$18.08, and were little changed in after-hours trading.
Shares of companies that undertake reverse splits often fall as
investors remain skeptical about the prospects of such
companies.
In addition, some market participants noted that AIG's sharp
decline Wednesday could be because it is easier to take short
positions in higher-priced stocks. Also, many of those trading in
AIG shares were purely speculating and liked having the stock
around $1, so those folks likely sold Wednesday.
AIG shares have been a risky bet for some time, losing more than
90% of their value over the past year. The company, which was at
the forefront of the financial crisis and is now mostly owned by
the U.S. government, has been looking to pare assets and raise
capital to pay back the tens of billions of dollars in government
aid it received.
-By Jacob Bunge and Lauren Pollock, Dow Jones Newswires;
212-416-2356; jacob.bunge@dowjones.com
(Geoff Rogow and Annelena Loeb contributed to this article)