August 6, 2009
Two AIG executives pay for SEC charges
Two former American International Group executives will pay fines but will neither deny nor admit to accounting allegations, U.S. regulators said Thursday.
The Securities and Exchange Commission accused former Chief Executive Maurice
Hank Greenberg and former Chief Financial Officer Howard Smith of numerous improper accounting moves between 2000 and 2005. Greenberg agreed to pay a $15 million fine and Smith agreed to pay $1.5 million, Business Week reported.
The SEC complaint said the executives creatively managed the value of AIG's share price, creating the impression the company was consistently meeting or exceeding key earnings and growth targets.
Corporate leaders cannot avoid the truth and consequences of their companies' performance by using improper accounting gimmicks and signing off on distorted financial reports, said Robert Khuzami, director of the SEC's Enforcement Division.
The complaint, filed in U.S. District Court in New York, said the two created
sham reinsurance transactions to make it appear the insurer had increased its loss reserves. Regulators said AIG set up a deal with an offshore shell entity that may have concealed underwriting losses from its auto-warranty insurance business and conducted other transactions that allowed it to recognize capital gains improperly.