Grand jury indictments and an SEC civil enforcement action were filed by the United States on February 2, 2006 against individuals alleged to have used finite reinsurance contracts to help AIG mislead its investors about its loss reserves. Individuals named in the indictment were Ronald Ferguson, Elizabeth Monrad and Robert Graham formerly of GenRe and Christian Milton formerly of AIG. Also named in the enforcement action complaint but not in the indictment was Christopher Garand formerly of GenRe.
According to a press release by the SEC:
"The complaint details recorded conversations among the defendants and other evidence reflecting the planning and implementation of the sham transaction. On the basis of this evidence, the complaint charges that the defendants understood from the beginning that they were structuring a sham transaction involving the creation of phony documents for the purpose of providing apparent support for false accounting entries AIG made on its books."
http://www.sec.gov/news/press/2006-15.htm
The 40-page complaint in the enforcement action is here:
http://www.sec.gov/litigation/complaints/comp19552.pdf
The Department of Justice press release regarding the indictments in the Eastern District of Virginia is here:
http://www.usdoj.gov/opa/pr/2006/February/06_crm_057.html
Earlier references in Unintended Consequences regarding finite reinsurance and these actions include:
Unintended Consequences: Wharton's Thoughts on AIG and "finite reinsurance" (April 7, 2005)
Unintended Consequences: "Finite Risk Reinsurance" background online (Nov. 24, 2004)
Unintended Consequences: Spitzer and SEC investigate "finite insurance" (Nov. 16, 2004)
Unintended Consequences: AIG targeted by US Grand Jury, AP reports (Oct. 22, 2004)
Posted by dougsimpson at February 3, 2006 03:38 PM