Posted on 03/04/2009 7:15:18 AM PST by marshmallow
American International Group Inc. (AIG), responding to a lawsuit filed by former Chief Executive Maurice "Hank" Greenberg, said he was "directly responsible" for the creation of financial products that led to the company's near collapse.
The insurance giant called the suit, alleging securities fraud tied to misrepresentations of billion of dollars in losses on credit default swaps, " utterly without merit."
"It strains common sense to accept Greenberg's allegations that he was misled or did not appreciate the risks from the multisector CDS book written by AIG," the company said.
Greenberg, who led the insurance giant for almost 40 years, alleges that misrepresentations by the defendants - including former Chief Executive Martin Sullivan; former Chief Financial Officer Steven Bensinger; the former head of AIG's financial products division, Joseph Cassano; and four directors - led him to acquire stock in AIG at an artificially inflated price as part of his deferred compensation plan.
Responding to company's comments, Liz Bowyer, a spokeswoman for Greenberg, said, "These attacks on Mr. Greenberg are apparently designed to deflect attention from AIG's disastrous performance since Mr. Greenberg retired four years ago, and to distract attention from its wasteful use of shareholder and taxpayer funds since that time."
The company has received about $180 billion in federal government loans since September.
Bowyer said massive losses at AIG in 2007 and 2008 resulted from a shift in the way the financial products unit did business, reportedly writing as many CDSs on collateralized debt obligations in the nine months after Greenberg's departure as it had written in the previous seven years, with a majority of those exposed to subprime mortgages.
"Moreover, the risk controls that Mr. Greenberg and his team put in place reportedly were weakened or removed after his retirement, and the massive additional exposure in AIGFP was.......
(Excerpt) Read more at money.cnn.com ...
Further to yesterday's news the Greenberg is suing AIG for all the now worthless stock which he purchased.
Pass the popcorn.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.