Posted Mar 03, 2009 08:50 pm CST
Forced to resign in 2005 as chairman and chief executive of insurance giant American International Group Inc. after almost 40 years at the helm, Maurice “Hank” Greenberg is now suing AIG over an alleged securities fraud.
Material misrepresentations and omissions by some former officers and four directors concerning AIG’s credit-default-swap portfolio caused him to overpay for AIG stock he acquired under a deferred compensation plan, Greenberg contends in the lawsuit. It was filed Friday in federal court in New York by Boies Schiller & Flexner, according to reports by Bloomberg and the Wall Street Journal (sub. req.).
Greenberg, 83, is alleging that he lost hundreds of millions of dollars as a result of a plunge in the value of AIG stock (shares are down 73 percent so far this year) and paid too much tax on shares worth far less than their claimed value due to misrepresentations by the defendants.
The WSJ article doesn’t include any comment from AIG, but a company spokeswoman told Bloomberg that Greenberg’s lawsuit is without merit.
Greenberg was at the helm, according to AIG’s current CEO, Edward Liddy, when a troubled financial products unit castigated today by Federal Reserve Chairman Ben Bernanke was initially formed. (Liddy apparently is not named as a defendant in Greenberg’s lawsuit.)
“I think he’s responsible” for some of AIG’s difficulties, says Liddy of Greenberg, in an interview with Bloomberg. “The formation of the AIG (financial products) unit, which has literally brought us to our knees, that happened on his watch. The compensation systems that have gone astray, happened on his watch. I don’t think it’s as clean and simple as sometimes Hank would like to portray.”