Maurice R. "Hank" Greenberg - angry and vindictive after being forced out as American International Group Inc.'s (AIG) chief executive - improperly seized control in 2005 of millions of shares of the insurer's stock held by a sister company, Starr International Co., a lawyer for AIG said Monday.

In his opening statement, Theodore Wells, a lawyer for AIG, said Greenberg, through Starr International, or SICO, violated a trust agreement, in which the shares would be used to fund a deferred-compensation plan for select AIG executives.

However, David Boies, a lawyer for SICO, said AIG wasn't a beneficiary of the trust and has no right to the shares at issue. He said the block of shares was placed with SICO to protect AIG from a takeover bid, to go to charity if SICO were liquidated and to fund other projects, such as compensation for select AIG executives.

"It was Hank Greenberg who betrayed the trust, the pledge," Wells said.

AIG is suing SICO for $4.3 billion in damages - representing millions of shares of stock sold by SICO - and control of 185.6 million remaining shares of the insurer. The shares went to Starr in 1970 as part of a reorganization of AIG and its affiliates.

The trial is expected to last about a month. Greenberg is expected to take the stand on Tuesday.

However, some of the more colorful elements of this long-running dispute won't be on display.

On Monday, U.S. District Judge Jed S. Rakoff in Manhattan, who is presiding, ruled that AIG's lawyers can't bring up the circumstances behind Greenberg's forced departure from AIG - namely probes into the company's accounting.

In 2006, AIG agreed to pay more than $1.6 billion to settle accounting and fraud allegations by the New York Attorney General's Office and the Securities and Exchange Commission. The attorney general's office is separately pursuing a civil action in state court against Greenberg.

Judge Rakoff also restricted SICO's lawyers from discussing at trial recent probes into the insurer's controversial payment of retention bonuses to some employees last fall after it took billions of dollars in government bailout money.

"This is a case about an alleged trust and an alleged conversion of valuable shares," the judge said. "It's not a forum for airing all the innumerable other issues - many of which are unresolved - about Mr. Greenberg, Starr, AIG bonuses, investigations and what have you."

During his opening, Wells said SICO for 35 years used the stock to fund a deferred-compensation plan in which participating AIG executives received compensation from the plan when they retired from the company. It was an incentive to keep executives at the company long term, Wells said.

That changed after Greenberg was forced out. Greenberg "got an attitude, got mad and said it's payback time," Wells said. Greenberg threw eight AIG executives off of SICO's board and took control of the shares, Wells said. He also ordered that the AIG share certificates, which were being held in New York, be flown by private plane to Bermuda after AIG filed legal claims over control of the shares.

However, Greenberg, for years, had described the shares at SICO as being held in trust for the benefit of "future generations of managers in AIG companies."

During his opening statement, Wells played one of several videotapes of speeches given by Greenberg that are expected to be played at trial in which he describes the arrangement as a "trust that cannot be broken by anybody."

In his opening statement, Boies, SICO's lawyer, said AIG has no right to the shares and wasn't the beneficiary of any trust. The type of trust that AIG now claims was in place would have restricted SICO's ability to protect the insurer for takeover, turn its shares over to charity in the event of liquidation or engage in new projects. AIG has no written agreement for a trust in which it is the sole beneficiary, Boies said.

"It couldn't be clearer: What SICO does with SICO's stock is up to SICO," Boies said.

Boies is expected to continue his opening statement on Tuesday.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com