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Life Health > Life Insurance

Greenberg Gets Wells Notice

By Daniel Hays

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The U.S. Securities and Exchange Commission has notified the former chairman of American International Group, Maurice Greenberg, that it may bring charges against him for his alleged role in a phony accounting scheme, Mr. Greenberg’s attorney confirmed.

Mr. Greenberg was sent what is known as a “Wells Notice,” which offers the respondent an opportunity to provide a written statement addressing the charges before a decision is made on whether to proceed.

The notice is in connection with a 2001 reinsurance arrangement between AIG and General Reinsurance that a federal jury in February found was a sham transaction, resulting in the conviction of 5 insurance executives on conspiracy and other charges.

U.S. District Judge Christopher F. Droney in Hartford, Conn., who presided at the trial, declared in a recent ruling that the government’s evidence was sufficient for a jury to conclude that the conspiracy–which engineered a deal that would fraudulently boost AIG’s financial picture–began with a phone call from Mr. Greenberg.

“This is a step in the process,” said Mr. Greenberg’s attorney, Robert Morvillo, in reaction to the government’s move. “The issues have been narrowed down to a small number of issues. We remain confident of our position on the merits, and we believe that none of the remaining issues are material to AIG’s financial statements. When the Commission has had the opportunity to consider all the facts, we believe that they will agree.”

Daniel Hays is a senior editor with National Underwriter’s Property & Casualty edition.

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