Simon & Partners LLP's Bradley Simon, a former federal prosecutor turned white-collar criminal defense attorney, says American International Group Inc.'s (NYSE:AIG) lawsuit against former CEO Maurice "Hank" Greenberg could be one of many going forward as the financial crisis settles down.
"As a result of the financial crisis, I think you are going to see more lawsuits similar to this one where certain actions of company officers and executives are called into question," Simon said in a phone interview.
AIG filed a lawsuit against Greenberg and investment company Starr International Co. after Greenberg was ousted in 2005. The suit alleges Greenberg improperly sold $4.3 billion in stock held by Starr
in a trust created to pay top performers at AIG. Even though Judge Jed Rakoff ruled that investigations concerning why Greenberg was ousted from the insurer in 2005 and the insurer's recent bailout could not be brought up in the trial, Simon believes issues concerning Greenberg's management and the AIG saga will be touched upon. "They are going to be examining his management decisions and looking at everything Greenberg did while in charge at AIG," Simon explained.
Simon believes this lawsuit has greater implications and is unique in that it will be delving into cultural attitude prior to the financial crisis regarding corporate governance.
Simon said:
I think this underscores what happens far too frequently, which is that corporate executives forget that they have fiduciary duties to shareholders and employees. If it is true that he sold and liquidated stocks belonging to company employees, that is serious and a jury could very well award damages equal to the value of the sold shares. In other words, Greenberg could be forced to return the money that was allegedly converted. - Maria Woehr
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