Tuesday, March 3, 2009
NEW YORK, March 2 -- The former chief executive of American International Group on Monday sued the company he led for 38 years, saying AIG misled investors about its exposure to subprime mortgages.
Maurice "Hank" Greenberg, 83, claimed in papers filed in federal court in Manhattan that the company, once the world's largest insurer, has ruined his fortune by lying about its financial health.
The lawsuit says Greenberg, who served as AIG's chief executive from 1967 until he retired in March 2005, was the New York-based company's largest non-institutional shareholder.
Christina Pretto, a company spokeswoman, said: "We believe the suit is without merit and we will defend ourselves vigorously."
AIG's stock fell to 42 cents Monday, as the government threw a stunning new $30 billion lifeline to the insurance giant even as it confirmed it lost $61.7 billion in the fourth quarter. The source of trouble for AIG, which has 74 million customers worldwide and operations in more than 130 countries, has been its business insuring mortgage-backed securities and other debt against default. That business imploded when the credit crisis struck with force.
The government has made four separate efforts to save the company, totaling more than $170 billion.
Greenberg was forced out of AIG during a controversy in 2005 when the company restated its financial statements for the previous five years, acknowledging accounting improprieties including "improper or inappropriate transactions."
New York regulators later accused AIG, Greenberg and the company's former chief financial officer of orchestrating an accounting scheme that made AIG's financial picture appear brighter than it was, misleading both investors and regulators.