Updated from 3:19 a.m. EDT

Shares of

Marsh & McLennan

(MMC) - Get Report

were whipped around Friday on speculation about the fate of the scandal-tainted insurance broker's chief executive.

In late afternoon trading, Marsh was up $1.69, or 6%, to $26.54 on a report that CEO Jeffrey Greenberg would resign from the top job Friday. They went as high as $27.60 earlier in the session.

Speculation about Greenberg's resignation began early Friday with a story in

The Wall Street Journal

saying Marsh's independent directors were weighing whether to oust Greenberg, who does not have an employment contract.

By early afternoon, the

Financial Times

was reporting that Greenberg would step down and be replaced on an interim basis by Jules Kroll, founder of the well-known corporate investigative firm that bears his name. Marsh acquired Kroll earlier this year.

Jules Kroll called the story "erroneous" in a statement.

Wall Street would welcome Greenberg's departure since it could facilitate settlement negotiations with New York Attorney General Eliot Spitzer, who filed civil fraud charges against Marsh last week. Spitzer, in charging Marsh with taking kickbacks from insurers and engaging in bid rigging, vowed not to negotiate with Marsh unless the company's board made changes in its top management.

Shares of Marsh had fallen nearly 50% since the lawsuit was filed.

But the departure of Greenberg won't necessarily bring a quick resolution to Spitzer's case. A person familiar with the investigation said it is unlikely Spitzer would be prepared to settle so early in the process. In the mutual fund investigation, Spitzer's office often announced settlements with mutual fund companies many months after the charges were first filed.

A Marsh spokeswoman could not be reached for comment.

Greenberg has been on the defensive since Spitzer sued his company last week, alleging the insurance broker improperly distributed business according to a kickback scheme and solicited phony bids to disguise the fraud. The company announced a week ago it would stop taking the fees at the center of the complaint, with Greenberg saying in a statement that he was "greatly disturbed regarding the allegations of wrongdoing."

Spitzer, in announcing the probe, said Marsh's board "should think long and hard, very long and hard, about the leadership of your company." Greenberg was also in charge of Marsh when its Putnam Investments unit emerged as a key player in the mutual fund market-timing scandal, another Spitzer campaign.

For the past week, Marsh has been scrambling to play damage control. A few days after the charges were filed the firm announced it would stop accepting the disputed commissions at the heart of the scandal. This week it suspended five employees, believed to be the same ones who were implicated by Spitzer's office in the alleged bid-rigging scheme.

Additionally, Michael Cherkasky was named chairman and CEO of Marsh Inc., the firm's insurance brokerage division. Cherkasky, formerly CEO of Marsh Kroll, was the head of the criminal investigations unit in the Manhattan District Attorney's Office. He was Spitzer's supervisor in the DA's office, when Spitzer worked there for several years more than a decade ago. The two men are friends.

Meanwhile, in a separate matter, the crusading attorney general might be about to turn his scrutiny away from Wall Street, reports said. Four big music companies -- Warner Music, EMI, Universal Music and BMG Music -- told

The Wall Street Journal

they received requests for information from Spitzer over the last several weeks. His office is reportedly investigating the role of consultants in getting music played on radio stations.