North America

Greenberg will not face criminal charges

The New York Attorney General Office confirmed that no criminal charges would be brought against Maurice Greenberg, the former chairman and chief executive of AIG, but that the Office would expand its civil case against Mr Greenberg. The Attorney General’s Office action will charge Mr Greenberg and AIG with engaging in doubtful accounting practices to mislead AIG investors and state regulators. The civil action also alleges that Mr Greenberg and AIG used false reinsurance transactions to inflate the size of the group’s claims reserves and to disguise the extent of other AIG losses. The latter allegations centre around a $500mn finite reinsurance deal between AIG and General Re, a subsidiary of the Berkshire Hathaway group. Mr Greenberg also stands accused of ordering stockbrokers to buy up AIG shares with company funds in order for the share not to drop below a certain level. These transactions are alleged to have occurred at a time close to the end of the trading day as to be in breach of the US Security and Exchange Commission’s rules on such trades. While the New York Attorney General’s Office has chosen not to bring criminal charges against Mr Greenberg and AIG, prosecutors at the US Justice Department and at the Eastern District of Virginia are reportedly considering criminal charges in relation to the stock trades and the finite reinsurance deals.