New York Attorney General Eric Schneiderman told a court he won’t pursue damages against ex- American International Group Inc. (AIG) Chief Executive Officer Maurice “Hank” Greenberg in a lawsuit dating back to 2005.
The state will still seek a court ruling banning Greenberg from participating in the securities industry or serving as an officer or director of a public company, according to a letter New York Solicitor General Barbara Underwood sent yesterday to the clerk of the New York State Court of Appeals.
Greenberg in the appellate court case is challenging the attorney general’s legal standing to seek damages for allegedly fraudulent reinsurance transactions. Underwood’s letter said it was sent in response to an inquiry by the court as to how Greenberg’s settlement of a federal shareholder lawsuit would affect the appellate case.
“Attorney General Schneiderman feels strongly that individuals in the financial services industry who perpetrate fraud, no matter how wealthy or powerful, must be held publicly accountable, and that is why we believe justice will best be served by proceeding to a long overdue trial of Mr. Greenberg as quickly as possible,” Damien LaVera, a spokesman for the attorney general, said in an e-mailed statement.
In the 2005 suit, the state accused Greenberg and former AIG Chief Financial Officer Howard Smith of using sham transactions to distort New York-based AIG’s reported financial condition.
David Boies, Greenberg’s lawyer, said in an e-mail yesterday he was pleased with the attorney general’s decision to drop the damages claims. Boies said in a letter to the appeals court today that the case should be dismissed entirely, arguing that the claims Schneiderman is now pursuing were long ago abandoned.
“NYAG has had eight years, millions of pages of documents, and unlimited depositions to try to develop evidence of appellants’ alleged wrongdoing,” he wrote. “Nothing is served by further prolonging this case.”
This month, a federal judge in New York approved a $115 million settlement between AIG shareholders and former AIG executives, including Greenberg and Smith.
The plaintiffs, led by a group of Ohio public pension funds, sued in 2004 and 2005, claiming the defendants misstated their involvement in alleged market-division and bid-rigging schemes and also misled investors about an alleged accounting fraud at AIG that resulted in the company’s restating $3.9 billion of earnings. A later restatement reduced the amount to $3.4 billion.
The lower-court case is State of New York v. Greenberg, 401720-2005, New York State Supreme Court, New York County (Manhattan).
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