The U.S. Securities and Exchange Commission charged two former American International Group (AIG) executives with fraud and securities laws violations. The two ex-AIG corporate leaders agreed to settle the government charges in U.S. District Court for the Southern District of New York.
Washington government lawyers with the Securities and Exchange Commission filed fraud charges against former American International Group executives.
Washington, D.C.–Government lawyers for the United States Securities and Exchange Commission (SEC) http://www.sec.gov charged former American International Group Chairman and CEO Maurice “Hank” Greenberg and former Vice Chairman and CFO Howard Smith for their participation and involvement in AIG’s imporperly reported financial results between 2000 and 2005 in U.S. District Court for the Southern District of New York. According to court documents, Greenberg and Smith agreed to settle the securities fraud charges brought by a team of government attorneys and pay disgorgement and penalties totaling $15 million and $1.5 million respectively. SEC regulators accused the top former AIG leaders for making material misstatements and misrepresenting accounting transactions, which inflated AIG’s reported financial results. These improper accounting practices gave consumers and investors the false impression that the insurance and financial services industry leader was consistent with double-digit growth.
Government lawyers and regulators with the SEC previously charged AIG with securities fraud and improper accounting practices in 2006. AIG, an insurance industry leader settled the federal governments allegations. AIG agreed to pay disgorgement of $700 million and a penalty of $100 million plus other conditions. The SEC’s http://www.sec.gov/news/press/2009/2009-180.htm legal complaint claimed Greenberg and Smith were the overseers in various improper transactions and presented an untrue financial picture which gave AIG a claim to false success at meeting their financial goals. Both AIG leaders consented to a judgment which does not require them to admit or deny any of the federal government’s allegations. Part of Greenberg’s agreement requires him to pay a penalty of $7.5 million and disgorgement of $7.5 million along with other stipulations. Smith consented to a similar judgement without admitting or denying any of the SEC’s allegations and agreed to pay a penalty of $750,000 and disgorgement of $750,000. An additional stipulation in Smith’s settlement prohibits him from acting as an officer or director of any public company for three years. Smith was also suspended from appearing or practicing before the Commission as an accountant for five years.
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