10/05/2012 - Myclipp

Reuters General/ - Article, Seg, 14 de Maio de 2012
CLIPPING INTERNACIONAL (Supreme Court)
AIG ex-CEO Greenberg eyes reversing
NY fraud case
By Jonathan Stempel Mon May 14, 2012 8:04pm EDT
n">(Reuters) - Former American International Group
Inc Chief Executive Maurice "Hank" Greenberg said
New York's attorney general should be barred from
invoking a 91-year-old state law in a fraud case over
two suspect reinsurance transactions. Greenberg and
co-defendant Howard Smith, AIG's former chief
financial officer, sought permission on Monday to
appeal to the state's highest court, the Court of
Appeals, a May 8 appellate ruling letting Attorney
General Eric Schneiderman pursue civil fraud claims
against them under the state's Martin Act.That ruling
by the Manhattan appeals court cleared the way for
the 7-year-old case to go to trial.Investigators claim a
transaction with General Re Corp, a unit of Warren
Buffett's Berkshire Hathaway Inc, helped AIG inflate
loss reserves by $500 million without transferring risk,
while a transaction with Capco Reinsurance Co helped
AIG hide more $200 million of losses. Both
transactions took place more than a decade
ago.Unlike under federal law, the Martin Act does not
require investigators to prove intent in order to prevail
on a securities fraud claim.According to David Boies, a
lawyer for Greenberg, a key issue is whether
Schneiderman may use the Martin Act "to pursue a de
facto securities class action" on behalf of shareholders,
despite conflicting federal laws designed to promote
"uniformity and certainty" in regulating securities.In a
court filing, Greenberg and Smith said that power
would make "every executive of a New York company
or a company with shares traded on the New York
Stock Exchange potentially liable - personally - for
substantial damages for misstatements" by their
companies, even absent proof of intent or
reliance.Granting such power would have "far-reaching
implications for New York's continuing role as an
economic and financial capital," they added.James
Freedland, a spokesman for Schneiderman, said: "We
are confident that their latest attempt to reverse
decades of settled law to escape responsibility for their
misconduct will be rejected."Greenberg and Smith
were first sued in 2005 by Eliot Spitzer, then New
York's attorney general. Spitzer's successors Andrew
Cuomo and Schneiderman have continued to pursue
the case."The main obstacle is that Martin Act actions
fairly clearly aren't preempted by the securities laws,"
said David Skeel, a law professor at the University of
Pennsylvania. "As a result, Greenberg has to argue
that the action really isn't a Martin Act action - it's really
just a private class action dressed up as a Martin Act
claim."While Greenberg's contention is "far from a silly
argument," Skeel said "it will be tough to persuade a
court to go along."Greenberg, 87, left New York-based
AIG in March 2005 after nearly four decades at the
insurer's helm.AIG's transaction with General Re led to
five convictions and two guilty pleas of former officials
of those companies. A federal appeals court threw out
the convictions in August and a new trial has been
scheduled for January 2013. Buffett was not accused
of wrongdoing.The U.S. government still owns 61
percent of AIG, following $182.3 billion of
taxpayer-funded bailouts.Greenberg's company, Starr
International Co, once AIG's largest shareholder, has
sued the government for $25 billion over the bailouts,
which it has called unconstitutional.The case is New
York v. Greenberg et al, New York State Supreme
Court, Appellate Division, 1st Department, No.
5297.(Reporting by Jonathan Stempel in New York;
editing by Andre Grenon)
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