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Regulation and Compliance > State Regulation

Ex-AIG head Greenberg finally gets to tell his story at trial

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(Bloomberg) – Former American International Group Inc. Chairman Maurice “Hank” Greenberg is finally getting to tell his side of the story in a fraud lawsuit filed against him more than 11 years ago by then-New York Attorney General Eliot Spitzer.

The 91-year-old World War II veteran took the witness stand in a Manhattan courtroom Tuesday morning to rebut claims that in 2005 he and former AIG Chief Financial Officer Howard Smith orchestrated two sham transactions to hide the insurer’s financial condition from shareholders.

The current attorney general, Eric Schneiderman, is seeking to bar Greenberg and Smith from serving as officers or directors of public companies and force them to give up more than $52 million in bonuses. Schneiderman dropped his demand for $6 billion in damages in the case after Greenberg and other executives paid $115 million in 2009 to settle suits filed by AIG shareholders.

The trial, which is being heard without a jury, is likely to last through January. Greenberg had asked the U.S. Supreme Court to review a June decision by New York’s top court allowing the trial to proceed, arguing the state claims are preempted by federal law.

Greenberg was called to the witness stand by Assistant Attorney General David Nachman, who will question the former AIG chairman about his knowledge of the two transactions. Greenberg will then be questioned by his own lawyers.

For more on the lawsuit, click here.

The case is based on the Martin Act, a century-old state law that gives New York prosecutors broad powers to investigate white-collar crime that was revived by Spitzer during his tenure as attorney general.

The trial began Sept. 12.

The case is State of New York v. Greenberg, 401720-2005, New York state Supreme Court (Manhattan).


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