Ex-AIG chief Greenberg should still face trial: NY state lawyer

Tue May 28, 2013 9:42pm EDT
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By Karen Freifeld

NEW YORK (Reuters) - Hank Greenberg should still face trial over sham transactions he is accused of orchestrating while he was head of American International Group (AIG.N: Quote), even though New York has dropped most of its claims against him, a lawyer for the state argued on Tuesday.

"We're looking for a deterrent effect," Barbara Underwood, the state solicitor general, told New York's highest court. She said the state wanted an admission from Greenberg, who headed AIG until March 2005.

Greenberg is accused of misleading shareholders over the financial health of AIG through transactions a decade ago that the attorney general has said were designed to help boost the company's share price.

New York Attorney General Eric Schneiderman dropped claims for as much as $6 billion in damages last month, but he is still trying to have Greenberg, 88, banned from the securities industry and from being a director or officer of a public company.

New York's Court of Appeals heard arguments on Tuesday over whether the case against Greenberg and former Chief Financial Officer Howard Smith should go forward. A decision could come in June.

David Boies, a prominent lawyer who represents Greenberg, asked the judges to throw out the case before trial, arguing there was no evidence of wrongdoing and no basis for injunctive relief such as the bans.

"In order to get injunctive relief, you must show either some danger of continuing violation or some ability to ask for disgorgement and restitution," Boies told the panel.

The judges questioned Boies about evidence against Greenberg and they also pressed Underwood about whether the attorney general was seeking a moral victory.   Continued...

Former CEO of American International Group Inc., Maurice "Hank" Greenberg, (C) leaves a building in downtown New York after being deposed by the Attorney General's office March 10, 2010. REUTERS/Jessica Rinaldi