Settling Up For Less Than Pennies On The Dollar

Former AIG head Hank Greenberg is settling up with the SEC for $15 million. Compared to the $100 billion the government gave AIG, sure, that's a victory!

Greenberg, 84, and former AIG Chief Financial Officer Howard Smith “directed several different accounting transactions to materially affect AIG’s reported financial results,” the Securities and Exchange Commission said in a lawsuit filed today in federal court in Manhattan. Smith will pay $1.5 million to resolve the suit.

“Corporate leaders cannot avoid the truth and consequences of their companies’ performance by using improper accounting gimmicks and signing off on distorted financial reports,” SEC Enforcement Director Robert Khuzami said in a statement. The accounting deals “presented a false financial picture and allowed AIG to claim success in meeting its performance goals.”

The insurer’s former chairman and chief executive officer has been locked in legal battles since AIG’s board pushed him out in 2005 during a probe by then-New York Attorney General Eliot Spitzer into reinsurance, the business of selling insurance to insurers. The company later restated $3.4 billion in earnings and in 2006 agreed to pay more than $1.6 billion to settle state and SEC claims it misled investors. Greenberg, a former U.S. Army captain and World War II combatant, has called much of the restatement unnecessary.

Nice deal if you can get it. Hank gives up a few mil, and everything's hunky dory with AIG again.

In agreeing to resolve the claims, Greenberg and Smith didn’t admit or deny wrongdoing, the SEC said.

“This settlement brings finality for Hank,” said Jacob Frenkel, a former federal prosecutor now practicing law at Shulman Rogers in Potomac, Maryland. “A settlement means no admission, no denial, and one day of news. When they fight the charges, every event in the case is another storyline.”

And AIG's much larger ripoffs go uninvestigated. After all, the CEO's paid his dues, and of course the Obama administration won't take a deeper look into Eliot Spitzer's AIG reinsurance investigation and how that turned into a pyramid scam that was paid for by you and me, thanks to government generosity.

Treasury Secretary Timothy Geithner told lawmakers in March that AIG was an insurance company “attached to a hedge fund that was allowed to build up without any adult supervision.” Federal Reserve Chairman Ben S. Bernanke said that no government rescue of a financial company made him “more angry” than AIG because the company “exploited a huge gap in the regulatory system.”

Helicopter Ben and Timmy are mad. Apparently that anger is worth about...$15 million of the $100 billion plus we're owed. You keep on thinking we'll get that money back as the banks restart their shell games with our seed money and build another bubble.

Less than pennies on the dollar. The free market, she works like the magic.