AIG under fraud spotlight
WASHINGTON, DC & LONDON - A former executive of American International Group (AIG) has been given a four-year prison sentence for manipulating the insurance firm's financial statements. Christian Milton, previously vice-president of reinsurance at AIG between 1982 and March 2005, was found guilty by US district judge Christopher Droney and jailed for conspiracy, securities fraud and other charges.
Prosecutors alleged Milton was part of a scheme to falsely inflate AIG reported loss reserves, misleading investors and analysts about the firm's financial health. The scheme followed criticisms of a drop in AIG's loss reserves in the third quarter of 2000 and involved sham reinsurance transactions between AIG subsidiaries and reinsurer General Re. Gen Re's former chief executive Ronald Ferguson was sentenced to two years in prison in 2008 for his part in the scheme. Milton faces an additional two years supervised release and a $200,000 fine. He must surrender himself to federal prison authorities within 60 days. AIG, previously the world's largest insurer, received an $85 billion US government bail-out loan in September 2008 - which has since increased to $152 billion.
In a separate case, UK authorities are investigating possible illegal transactions at the insurer's UK subsidiary AIG Financial Products, involved in the sale of credit default swaps. The unit lost £8 billion before its US parent was forced to seek government funding. The Serious Fraud Office and Financial Services Authority are understood to be seeking documentation from the firm's UK offices. Details of the probe are sketchy, but investigators have said AIG's insurance operations are not involved.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management
The American way: a stress-test substitute for Basel’s IRRBB?
Bankers divided over new CCAR scenario designed to bridge supervisory gap exposed by SVB failure
Industry warns CFTC against rushing to regulate AI for trading
Vote on workplan pulled amid calls to avoid duplicating rules from other regulatory agencies