|
Defrauded AIG investors to get $843M from SEC
|
|
(May 21, 2009 - Thursday) - http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090520/REG/905209969
Storied scheme led to ex-CEO Greenberg’s departure
By Darla Mercado
May 20, 2009, 2:22 PM EST
The Securities and Exchange has announced that it will pay $843 million to investors in American International Group Inc. who were jilted in an accounting and securities fraud fiasco dating back to 2000.
Checks to more than 257,000 investors will be distributed in the next few months, coming from a Fair Fund established by the SEC after AIG settled accusations that it had violated securities laws.
The payments to investors are related to a 2006 complaint filed by the SEC alleging that the New York-based insurer had entered into two sham reinsurance transactions in 2000 and 2001 with Stamford, Conn.-based General Re Corp.
The transactions had allowed AIG to add $500 million in fake loss reserves to its balance sheets for the fourth quarter of 2000 and first quarter of 2001, according to the SEC.
That action boosted the insurer’s stock price and made its finances appear healthy to analysts and investors.
After federal and state regulators investigated AIG about the Gen Re transaction, the firm had to restate the accounting for 66 transactions.
In 2006, the insurer — without admitting or denying the SEC’s claims — agreed to pay a $100 million civil penalty to the commission and disgorge $700 million in ill-gotten gains.
In the end, the carrier settled with Eliot Spitzer, then New York State’s attorney general; Howard D. Mills, then New York’s insurance superintendent; the SEC; and the Department of Justice for more than $1.6 billion.
The storied scheme led to the departure of AIG chief executive Maurice R. “Hank” Greenberg from the insurer, as well as prison time for five former Gen Re and AIG executives.
The executives who have receive prison sentences are former Gen Re chief executive Ronald Ferguson; former Gen Re assistant general counsel Robert Graham; former Gen Re senior vice president Christopher Garand; Elizabeth A. Monrad, former finance chief at Gen Re; and Christian Milton, former head of reinsurance at AIG.
|
