updated 3/28/2005 1:05:28 PM ET 2005-03-28T18:05:28

The Securities and Exchange Commission has sent subpoenas to a dozen executives at American International Group Inc. amid several probes into whether questionable transactions were used to improperly bolster the insurance titan’s financial standing, a person familiar with the matter said Monday.

The person, speaking on condition of anonymity and confirming a report Monday in The Wall Street Journal, also said federal investigators were aware of 10 transactions that warranted review.

Meanwhile, the Journal, citing unidentified sources familiar with the case, said the AIG board overseeing an internal probe of the transactions could decide in the next few days whether to formally sever ties with Chairman Maurice R. “Hank” Greenberg. Greenberg, 79, was replaced as chief executive two weeks ago — though retained as chairman — as regulatory scrutiny mounted over a 2000 transaction that appeared to have been used to boost the company’s reserves artificially. He had been at the company’s helm for nearly four decades.

Greenberg has since become frustrated that he may be chairman in name only, and could pre-empt any board action by retiring, the Journal said, citing a source. Through his lawyer, he declined to comment.

Greenberg is scheduled to give a deposition to New York Attorney General Eliot Spitzer on April 12. Should he refuse to testify, directors could force him out, as they recently did two other executives, including Chief Financial Officer Howard I. Smith, who refused to cooperate with investigators.

AIG, which is headquartered in New York, is one of the world’s largest insurance companies.

Under investigation are a number of reinsurance transactions — insurance purchased by insurance companies — that regulators contend were designed to improve AIG’s financial statements without the transfer of risk. Risk transfer is necessary for a deal to be an insurance transaction and determines how it’s carried on a company’s books.

On Sunday, the company forced out another longtime executive, Michael Murphy, an executive who worked for American International Co., a Bermuda-based unit of AIG.

AIG spokesman Chris Winans said Murphy was terminated “for failure to cooperate with investigators.” He declined further comment.

The Journal said that Murphy was a confidante of Greenberg and an expert of tax matters. Murphy’s attorney, Sean O’Shea, said Sunday that he had not been informed of his client’s dismissal, and did not know whether Murphy had been notified.

A number of other AIG executives have been dismissed, including four who entered guilty pleas in the probe launched by Spitzer into bid rigging and price fixing by New York-based broker Marsh & McLennan Companies Inc.

Winans said that the company is still aiming to release its delayed annual report on Thursday.

He told The Journal that AIG continues to “believe that the matters subject to review are unlikely to result in significant changes to the company’s financial position,” meaning shareholder’s equity.

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