If the former chief executive is found responsible for accounting irregularities at American International Group Inc., as a Wall Street Journal report suggests, the company could try to recover some of his pay under the Sarbanes-Oxley Act.

The Journal reported that former top executive Maurice R. “Hank” Greenberg and former Chief Financial Officer Howard I. Smith may have been behind some of the improper accounting that will eventually result in more than four years of earnings restatements. The newspaper quoted people familiar with an AIG review by two outside law firms, Reuters reported.

The New York Times also reported that Greenberg is being investigated by the New York Attorney General's office and federal authorities to determine whether he manipulated stock prices prior to being forced out. The evidence cited is a recorded phone call in which Greenberg instructed an AIG employee, working on a company trading desk, to buy AIG shares.

The misleading accounting will mean cutting $2.7 billion from the insurer's net worth, AIG said in a statement.

AIG, in its statement, listed improper actions and said "certain former members of senior management" were able to circumvent internal controls, and that accounting entries that inflated the company's net worth by about $100 million since 2000 "appear to have been made at the direction of certain former members of senior management.” No names were listed.

Greenberg attorney David Boies said in statement quoted by the Journal: "Those decisions were made not merely by former senior management but by present senior management, including operational heads and the company's present directors and auditors."

Section 304 of the Sarbanes-Oxley Act states that the CEO and CFO must pay back a company for any bonus or other incentive-based or equity-based compensation, as well as stock-option profits, received during the 12-month period following results that must be restated "as a result of misconduct." The catch is proving the misconduct, BusinessWeek reported.

Greenberg has denied any wrongdoing. Smith's lawyer, Andrew Lawler, couldn't be reached for comment, BusinessWeek reported.

Greenberg received $1 million in base pay, plus a $6.5 million bonus and 750,000 stock options in 2003.

Gregory P. Taxin, CEO of Glass Lewis & Co., an independent San Francisco research firm, told BusinessWeek: "It seems obvious that an executive who received performance-based compensation ought to return it if that performance was misstated through [his] own fault."