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.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
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. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Modernising compliance functions with regtech
Regtech addresses the complexities of regulatory requirements, offering innovative tools to modernise compliance functions, streamline processes and enhance efficiency. This article explores its role in compliance and reporting within the banking sector,…
For the Fed discount window, destigmatisation starts at home
US supervisors must change tack to encourage central bank liquidity utilisation
Study finds just 10 banks plan to apply for FRTB models
Research provides extra insight on reasons for decline in internal models
EU banks hedge net interest income to pass new IRRBB test
Would-be outliers look to cut sensitivity of cashflows to rate moves, but at what cost?
Banks cry foul over shock decision from Basel Committee
Asset and liability management professionals question severity of criteria in revised IRRBB tests
Fresh EU push for single securities supervisor to compete with US
But MEP expresses ‘concern’ EU nations will stall revival of capital markets union
Discord deepens over fund-linked trades in FRTB
More banks use punitive approach to capital treatment under new trading book regime, irking regulators
AI, quantum computing and tokenisation set to transform finance – Menon
But significant barriers remain preventing the technologies from unlocking their full potential