Former AIG boss Hank Greenberg is being investigated by the SEC for a second deal
Former AIG CEO Maurice “Hank” Greenberg denies any wrongdoing in the finite reinsurance transaction between AIG and General Re. The deal led to the conviction of four former Gen Re executives and one former AIG executive.
They were found guilty of conspiring to create a sham $500m finite reinsurance transaction between the two firms, without assuming any real risk.
Greenberg, 83, has responded to a ruling by US District Judge Christopher Droney that implicated him in the case, according to Bloomberg.
The defendants turned to fraud “to get the deal done” after they were unable to complete the legitimate transaction requested by Greenberg, his spokesman Glen Rochkind said in a statement.
Evidence presented by the government was “sufficient” to lead a jury to conclude that the conspiracy began with a phone call by Greenberg, said Droney in his ruling.
“Starting with Greenberg's Oct. 31, 2000, phone call to [former Gen Re CEO Ronald] Ferguson, there was an agreement to carry out a transaction to artificially inflate AIG's loss reserves and deceive AIG's investors about the amount of the company's loss reserves and the quality of its earnings,” Droney wrote in the May 15 ruling from federal court in Hartford, Connecticut.
It was in a decision by a judge who denied the convicted Gen Re and AIG defendants a new trial that roused the Securities and Exchange Commission (SEC) to renew its interest in Greenberg and former AIG CFO Howard Smith.
According to reports, Greenberg and Smith have received a Wells notice from the SEC that says it may bring an enforcement action against them.
The SEC is reportedly investigating a second deal – this one between AIG and the now defunct Capco Reinsurance Co (once an AIG-controlled company).