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June 26, 2013

New York Suit Against Greenberg Allowed to Proceed

A New York State appeals court ruled on Tuesday that a lawsuit by the attorney general against Maurice R. Greenberg, the former chief executive of the American International Group, can proceed.

The decision by the Court of Appeals will let the attorney general, Eric T. Schneiderman, move forward with an eight-year-old case first brought by Eliot L. Spitzer and then by Andrew M. Cuomo — and could eventually lead to an appearance by Mr. Greenberg on the stand.

The battle arises from accusations that Mr. Greenberg and a former chief financial officer of A.I.G., Howard Smith, allowed the insurer to commit accounting fraud that led to a $3.9 billion restatement in 2005. The case predates the firm’s $182 billion government bailout during the financial crisis of 2008.

Earlier this year, Mr. Schneiderman took the unusual step of dropping his right to contest the settlement of a separate class-action lawsuit — and the right to win cash damages in its own legal action — pushing instead with his effort to bar Mr. Greenberg from the securities industry and from serving as a director or officer of a publicly traded company.”

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Read full New York Times article here

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