AIG Examiner Records Can Be Kept From Public, Court Says

American International Group Inc. records created by a government-imposed examiner can’t be considered court documents available to the public, a panel of federal judges said.

The U.S. Court of Appeals in Washington today said reports on AIG transactions stemming from a 2004 settlement with the U.S. Securities and Exchange Commission weren’t open court records, reversing a federal judge who ruled the materials should be given to the journalist seeking them.

The reports “are not judicial records subject to the right of access because the district court made no decisions about them or that otherwise relied on them,” U.S. Circuit Judge Janice Rogers Brown wrote in the opinion.

The documents were created by James Cole, then a lawyer at Bryan Cave LLP in Washington, who was hired by AIG as part of a $126 million settlement over regulators’ accusations that the insurer helped clients such as PNC Financial Services Group Inc. inflate profit.

Cole, who is now the Justice Department’s deputy attorney general, reviewed transactions to determine whether clients used them to violate generally accepted accounting principles.

Magazine Reporter

Sue Reisinger, a reporter for Corporate Counsel and American Lawyer magazines, asked the court to release the reports based on her common law and First Amendment rights.

“We are in the process of reviewing the court’s opinion to determine what options are available to us,” J. Joshua Wheeler, Reisinger’s lawyer and director of the Thomas Jefferson Center for the Protection of Free Expression, said in an e-mail. “Today’s decision does not alter our belief that the public interest would be served by the release of the reports.”

Jon Diat, a spokesman for AIG, declined to comment on the ruling.

Today’s decision reversed an April 16 ruling by U.S. District Judge Gladys Kessler who found that the reports “are relevant to the judicial function” because “they may provide information leading the SEC to return to this court to secure further relief.”

Kessler said releasing the reports was in the public’s interest given the role AIG played in the financial meltdown of 2008.

‘Devastating Events’

“The public needs to know whether the obligations AIG undertook in the consent order were complied with, whether the SEC was carrying out its enforcement and monitoring responsibilities under the consent order, and what, if any, role the compliance -- or noncompliance -- with the consent order may have played in the devastating events of 2008,” she said.

Brown, in the unanimous decision, said Cole had no relationship with the court and the judge didn’t have authority to supervise him or modify his mission.

The status of the records could change if the district court is asked to enforce the consent decree between the government and AIG, Brown said.

“That day has not yet arrived,” she said.

The case is Securities and Exchange Commission v. American International Group, 12-5141, U.S. Court of Appeals for the District of Columbia (Washington).

Before it's here, it's on the Bloomberg Terminal.