Former AIG CEO Hank Greenberg pays $15 million to settle SEC charges
Aug 6th 2009 12:00PM
Updated Dec 4th 2009 1:41PM
Former American International Group (AIG) CEO Hank Greenberg will pay $15 million to settle fraud charges filed by the Securities and Exchange Commission, The Wall Street Journal is reporting.
The charges stem from an accounting scandal that led to Greenberg's resignation in 2005. The next year, AIG paid $1.6 billion to settle charges that it manipulated its financial statements.
Former AIG Chief Financial Officer Howard Smith will also reportedly pay a $1.5 million settlement to the SEC for his alleged role in the scandal, according to the Wall Street Journal. Both Greenberg and Smith will be temporarily barred from serving as executives of public companies as part of their settlements, according to the Journal.
AIG's improper accounting involved booking underwriting losses from its insurance business as investment losses in a now-defunct subsidiary, so as to make them "less embarrassing" to the company, as well as fraudulent transactions with Berkshire Hathaway (BRK.A) subsidiary General Re.
As the Wall Street Journal points out, most of Greenberg's once-considerable wealth was tied up in AIG shares, which have fallen precipitously in the wake of a government takeover of the company last fall. He's still fighting civil charges filed by the New York attorney general covering much of the same alleged wrongdoing.
Greenberg's is the second big settlement the SEC has won this week. On Monday, Bank of America (BAC) paid $33 million to settle charges that it misled investors about Merrill Lynch's financial health before acquiring the firm last year.