Maurice "Hank" Greenberg transferred $2.14 billion of American International Group (AIG) shares to his wife four days before an accounting...
Maurice “Hank” Greenberg transferred $2.14 billion of American International Group (AIG) shares to his wife four days before an accounting investigation forced his ouster as chief executive.
Greenberg, who ran AIG for almost 40 years before stepping down last month, made the gift of 41.4 million AIG shares to Corinne Greenberg on March 11, according to a regulatory filing made yesterday. The shares represented 96 percent of his direct ownership stake in the New York-based company, the world’s largest insurer.
The shift may be an attempt to guard the couple’s wealth from lawsuits that might stem from the investigation by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission, said former federal prosecutor Christopher Bebel. AIG has lost more than $56 billion of market value since it disclosed accounting subpoenas Feb. 14.
“He probably did it on the advice of counsel as a precautionary measure,” said Bebel, who now practices law in Houston. The transfer may help shelter assets against civil suits and “put these assets beyond the reach of prosecutors,” Bebel said.
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Shares of AIG fell $1.59, or 3 percent, to $51.61 yesterday. The stock closed at $64.71 on the day of the transfer, making the gift worth $2.68 billion. The drop in AIG’s price has since reduced the stake’s value to about $2.14 billion.
Greenberg, 79, hasn’t been charged or accused of any wrongdoing, and he didn’t disclose the reasons for the transfer. He stepped down as CEO on March 14 and as chairman two weeks later as regulators widened their inquiry.
Transferring shares to his spouse may help protect the assets because Corinne Greenberg, 76, probably wasn’t a co-conspirator in any potential wrongdoing and isn’t a subject of the investigation, Bebel said.
Regulators and prosecutors are studying whether AIG and Greenberg used improper reinsurance transactions to inflate the insurer’s net worth and smooth earnings. The company said March 30 that improper accounting may have inflated its worth by $1.7 billion over 14 years.