New York Attorney General Eliot Spitzer has filed civil charges against American International Group (AIG) and its former CEO, Maurice “Hank” Greenberg.
Spitzer claims that AIG used false transactions in its financial statements to mislead regulators and investors. AIG’s former CFO Howard Smith has also been named as a defendant in the case.
“The irony of this case is that AIG was a well-run and profitable company that didn’t need to cheat,” stated Spitzer. “And yet, the former top management routinely and persistently resorted to deception and fraud in an apparent effort to improve the company’s financial results.”
AIG’s lawyers are currently getting ready to file the company’s annual report with the Securities and Exchange Commission. The report has already been delayed three times and must be presented by next Tuesday. The company said that the false financial reporting will reduce its value by as much as $2.7 billion. As MSN Money writes:
AIG shares have lost more than 25 per cent since February when the insurer revealed that regulators were examining its accounting practices. The Department of Justice and the Securities and Exchange Commission are also investigating AIG’s accounting methods. They have yet to press charges against the insurer nor Mr Greenberg and Mr Smith.
Mr Greenberg was forced to resign as chief executive of AIG in March after evidence emerged of his involvement in the transaction with General Re.
“The AIGs of the world don’t want to get bogged down in a lawsuit with the attorney general of New York or the SEC for that matter,” said former federal prosecutor Jacob Frenkel. “But for an individual of Mr. Greenberg’s stature, the outcome of this case follows him for the rest of his life, which may make the desire for vindication greater.”
For some reason, AIG shares went up 92 cents today in afternoon trading reaching $55.01. This may have to do with the company’s cooperation with authorities.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
