WATCH ON THE MEDIA.

The Wall Street Journal reported Oct. 3 that people familiar with the matter say M. R. "Hank" Greenberg, chairman of American International Group, pressured the former president of the New York Stock Exchange to persuade the investment firm responsible for keeping an orderly market in AIG shares to buy more of them.

The NYSE president, Richard Grasso, subsequently resigned after disclosure he had been paid $12 million in salary, bonuses and other allowances plus $140 million in deferred compensation.

"The unusual moves involving buying one of the Big Board's largest stocks raises questions about whether Mr. Grasso favored AIG because of Mr. Greenberg's previous role as an NYSE director and member of the board's compensation committee," reporters Kate Kelly and Susanne Craig reported.

"Mr. Greenberg was on the NYSE's compensation committee when the controversial employment contract that ultimately led to Mr. Grasso's ouster was developed and approved."

The article centered on the roles of Greenberg, Grasso and the investment firm Spear, Leeds & Kellogg, a unit of Goldman Sachs Group Inc. and the "specialist" firm making a market for AIG stocks.

The role of specialist firms is to maintain liquidity in assigned stocks; if buyers and sellers cannot agree on a price, they are to step in to buy or sell shares to facilitate trading.

Greenberg wrote to Grasso last year to complain Spears "needed to commit more of its own money to buy AIG shares, which had been volatile," the Journal was told.

"People familiar with the matter say that on a number of occasions after receiving complaints like this from Mr. Greenberg, Mr. Grasso would subsequently go to the NYSE trading floor and suggest that [Spear] buy more AIG shares to prevent Mr. Greenberg from moving his company to a rival exchange," the newspaper said.

"Any additional buying by Spear of AIG shares could have artificially boosted the insurance company's shares."

Meanwhile, the purchases were costly for Spear, "resulting in roughly $14 million in trading losses on AIG shares for the specialist firm over the past couple of years," the newspaper said.

The newspaper reported Grasso declined to comment and Greenberg "shrugs off any conflict" in the matter.

"If I think the specialist is not doing the job he should be doing in buying stock when the stock is under pressure . . . then I'm going to complain," it quoted him as saying.

"I expect as a listed company to have the exchange do what it's supposed to do," he was quoted as saying. "I will do whatever's right for shareholders of AIG."

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The Los Angeles Times reported Oct. 2 that Philip Morris has broken with precedent and paid $2 million to settle a lawsuit brought on behalf of a child who suffered disfiguring burns in a fire allegedly caused by a smoldering cigarette.

The agreement reached secretly last May "represents a breakthrough for plaintiffs after more than 20 years of fruitless litigation over cigarette fires," reported staff writer Myron Levin.

It also marks the first time that Philip Morris has agreed to pay a substantial settlement in any personal injury case, he reported.

The lawsuit filed on behalf of Shannon Moore, who was 21 months old when fire broke out in her mother's parked car, blamed defective design of the Marlboro 100 cigarette, which like other brands is intended to burn down to the filter even when not being puffed. The mother apparently dropped it unknowingly.

Levin said the settlement included a confidentiality provision, which the company waived when the Times heard about it. The agreement was reached after the company was rebuffed in several attempts to get the case dismissed, he said.

Philip Morris had argued there was no proof the cigarette caused the fire, and in any case the girl's mother was to blame for leaving her unattended.

He quoted William Ohlemeyer, Philip Morris vice president and associate general counsel, as saying the company hasn't changed its legal strategy and will pursue its policy of defending case.