NY court: Case against ex-AIG execs can continue

Blog News Posted on

New York's attorney general can continue his legal effort to bar two former American International Group Inc. executives from the securities industry and forfeit any improperly gained profits, the state's highest court ruled Thursday.

The Court of Appeals for the second time refused to dismiss the lawsuit originally filed in 2005 by then-Attorney General Eliot Spitzer, ruling it should go to trial.

The suit claims ex-AIG chief executive Maurice "Hank" Greenberg and ex-chief financial officer Howard Smith had engaged in fraudulent reinsurance transactions to conceal from investors a deteriorating financial condition.

AIG itself resolved state charges as part of a $1.64 billion agreement with regulators in 2006. The insurance giant was bailed out by the federal government in the 2008 financial crisis.

Greenberg and Smith settled related federal Securities and Exchange Commission complaints without admitting wrongdoing in 2009.

Their attorneys challenged the state lawsuit, arguing that New York's Martin Act against securities fraud authorizes neither a permanent industry ban nor disgorgement of profits, and that releases from other settlements barred further financial forfeit.

"As we have previously stated, in an appropriate case, disgorgement may be an available 'equitable remedy distinct from restitution' under the state's anti-fraud legislation," Judge Leslie Stein wrote. "Moreover, as with the attorney general's claim for an injunction, issues of fact exist which prevent us from concluding, as a matter of law that disgorgement is unwarranted."

The court rejected another dismissal motion two years ago, concluding there was sufficient fraud evidence for trial.

Legal News Media

Legal News is the top headline legal news provider for lawyers and legalprofessionals. Read law articles and breaking news from law firm's across the United States to get the latest updates. We reserve the right, at our discretion, to change, modify, add, or remove portions of the site at any time. Your This site is solely for your personal use. You are, of course, welcome to print or otherwise copy material from this site for your personal use. However, you may not distribute, exchange, modify, sell or transmit anything you copy from this Site, including but not limited to any text, images, audio and video, for any business, commercial or public purpose. Any unauthorized use of the text, images, audio and video may violate copyright laws, trademark laws, the laws of privacy and publicity and civil and criminal statutes.

 

American Bar Association – Start and Run a Law Firm

NewYorkStateBar.com – Starting a Law Firm