Thursday, August 6, 2009

Former AIG Executives Reach Settlement with the SEC

The Securities and Exchange Commission ("SEC") brought lawsuit in the Manhattan federal court against former American International Group, Inc. ("AIG") executives. In this suit, the SEC charged former AIG chief executive officer ("CEO") Maurice "Hank" Greenberg with altering AIG's financial records to inflate its earnings between 2000 and 2005. The suit charged former AIG chief financial officer ("CFO") Howard Smith with civil-fraud.

Based on SEC announcement, Greenberg and Smith have entered a settlement without admission of any wrongdoing. Under the settlement terms, Greenberg and Smith are paying $15 Million and $1.5 Million, repectively. As well, Greenberg and Smith have consented to judgments enjoining them from violating the anti-fraud provisions of the Exchange Act, and from controlling any person who violates the reporting, books and records and internal control provisions of the federal securities laws.

In 2006, SEC sued AIG for securities fraud and improper accounting. AIG was able to settle those claims by paying $700 million in disgorgement and $100 million in penalties.

The information for this article was obtained from various sources including Reuters, CNN, ABC News, and MarketWatch. For additional information run a search on Google.

Robin Mashal is a partner at the law firm of Hong & Mashal, LLP, and can be reached at (310) 286-2000. His practice focuses on business law, real estate law and civil litigation. Hong & Mashal LLP is a California business law firm.

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