On August 6, 2009, the SEC filed a Complaint in the Southern District of New York against former AIG Chairman and CEO Maurice “Hank” Greenberg and former Vice Chairman and CFO Howard Smith in connection with multiple accounting transaction allegedly inflating AIG’s financial statements between 2000 and 2005. The complaint charges Greenberg and Smith as control persons for AIG with numerous violations of securities laws including sham reinsurance transactions making it appear that AIG had legitimately increased its general loss reserves.
The complaint charges that Greenberg and Smith were aware of and responsible for AIG’s misleading financial statements over the last several years. According to an SEC Release, both Greenberg and Smith, without admitting or denying the allegations in the complaint, consented to a judgment enjoining them from violating several securities laws under penalty of fine. Smith also consented to the entry of an SEC order that will suspend him from appearing or practicing before the Commission as an accountant.Securities and Exchange Commission v. Greenberg, Case No. 09-6939 (USDC S.D. N.Y. Aug. 6, 2009).