Greenberg settles AIG charges for $15 million

Regulators say the former chief executive of the insurer agreed to statements that artificially inflated earnings.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Ben Rooney, staff writer

Maurice "Hank" Greenberg resigned as AIG's chief executive in 2005 amid charges of accounting and securities fraud at the insurance company.

NEW YORK ( -- Maurice "Hank" Greenberg, former chief executive of American International Group, has agreed to pay $15 million to settle charges related to an accounting scandal, the Securities and Exchange Commission said Thursday.

A complaint filed by the SEC said Greenberg and former chief financial officer Howard Smith were involved in "numerous improper accounting transactions" that inflated AIG's reported financial results between 2000 and 2005.

Smith agreed to pay $1.5 million to settle the charges, the SEC said.

"Corporate leaders cannot avoid the truth and consequences of their companies' performance by using improper accounting gimmicks and signing off on distorted financial reports," said Robert Khuzami, director of the SEC's Division of Enforcement, in a statement.

Among the improper accounting transactions listed in the complaint were sham reinsurance transactions as well as dealings with a shell company to conceal multi-million dollar underwriting losses.

The company was also charged with "economically senseless" transactions aimed at inflating investment gains and the sale of tax exempt municipal bonds to improperly report capital gains.

Greenberg, 83, relinquished his post as AIG's chief executive in 2005 amid a probe by then-New York Attorney General Eliot Spitzer for accounting fraud. The following year, the SEC charged AIG with securities fraud and improper accounting. The company settled the charges by repaying $700 million plus a fine of $100 million.

Greenberg is currently chairman and chief executive of privately-held insurance and investment firm C.V. Starr, which released a statement on his behalf.

"Mr. Greenberg is pleased that after a four-and-a-half year investigation involving the review of millions of pages of documents and numerous depositions, the SEC has now concluded not to charge Mr. Greenberg with any fraud," said C.V. Starr. "With these issues behind him, Mr. Greenberg looks forward to being able to concentrate on building for the future."

For his part, Smith had planned to challenge the allegations in court, according to a statement issued by his attorney, Vincent Sama of Winston & Strawn LLP in New York.

"Although Mr. Smith was originally inclined to litigate this matter, resolving the SEC matter allows him to move forward with his life without the added legal costs and distraction of this lawsuit," Sama said.

AIG was brought to the brink of collapse last year amid towering losses related to insurance products the company sold to investors with souring mortgage-backed investments.

The company has received $82 billion in taxpayer-funded bailouts and is now essentially owned by the government.  To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.