AIG case may not reach court
May 30, 2005
NEW YORK: New York authorities may push to settle with the American International Group (AIG) out of court after charging the insurer with dressing up its books to dupe regulators and investors, experts said. In dozens of investigations to clean up Wall Street, mutual funds and the insurance industry, New York attorney general Eliot Spitzer has taken only a handful of cases to court with the rest ending in settlements worth several billion dollars.
Legal experts said they assumed a settlement would amount to several hundred million dollars and a quick deal would be in the benefit of AIG, the world’s largest insurer by market value. “Having this litigation hanging over the head of AIG doesn’t do anything good for them,” said securities lawyer Andrew Stoltmann.
Representatives of AIG and Mr Spitzer’s office declined to comment. New York authorities on Thursday filed a civil lawsuit against AIG, former CEO Maurice “Hank” Greenberg, and its former CFO, saying they committed fraud and cooked the books to deceive investors. Mr Greenberg and former CFO Howard Smith were ousted after an investigation into AIG’s accounting errors picked up steam in February, with AIG acknowledging error.
Mr Spitzer accused the two AIG executives of taking part in fraudulent business deals that exaggerated the strength of the AIG’s core underwriting business and propped up its stock price. Investigations are continuing and criminal charges could still be laid against individuals within the company.