NationStates Jolt Archive

In a move also likely to raise eyebrows its former chief executive Hank Greenberg, who was ousted in 2005, said last night he would sue AIG for securities fraud. Greenberg said AIG's "material misrepresentations and omissions"had caused him to acquire shares as part of various deferred compensation plans at an inflated price, and later to lose nearly his entire investment after AIG's losses became known.

Umm, so the CEO is suing his former company for paying him in deferred stock that later tanked as they were over-valued.

AIG's fourth-quarter loss means it haemorrhaged $678m per day in the final three months of 2008, amounting to a loss of $28m per hour. It is AIG's fifth quarter in the red, with losses since 2007 totalling more than $100bn.

Surely the seeds of all this were laid on his watch?

Correct, crazy or just a little cheeky?

cheeky

but would the courts let HIM get to the head of the line to collect aig money when there are millions of other dupes out there who did not contribute to the fraud?

cheeky

but would the courts let HIM get to the head of the line to collect aig money when there are millions of other dupes out there who did not contribute to the fraud?

You mean, most of the nation?

Donn Vickrey, an analyst at research firm Gradient Analytics, said saving AIG could cost taxpayers as much as $250bn.

You mean, most of the nation?
well.

yeah.

but i would be beyond livid if our bailout money goes to lawsuits based on bad dealings by aig.

well.

yeah.

but i would be beyond livid if our bailout money goes to lawsuits based on bad dealings by aig.

That's the American way!:p

Hmm, as crazy as it sounds...if he bought the shares after he was no longer with the company, and he wasn't privy to any non-public, inside information...he'd be just like any other investor. It doesn't really matter whether he bought the shares as part of an options package he got in a former life. But that's a bunch of assumptions that are for the court to sort out, I guess.

But this is just how I read this. Since there isn't actually a source in the OP, and I'm too lazy to go searching, it might not have anything to do with the actual details of the case.

Hmm, as crazy as it sounds...if he bought the shares after he was no longer with the company, and he wasn't privy to any non-public, inside information...he'd be just like any other investor. It doesn't really matter whether he bought the shares as part of an options package he got in a former life. But that's a bunch of assumptions that are for the court to sort out, I guess.

But this is just how I read this. Since there isn't actually a source in the OP, and I'm too lazy to go searching, it might not have anything to do with the actual details of the case.

It was an aside paragraph in an article on the general woes of AIG and didn't go into the case anymore than that,

Regardless, here's the link (http://www.guardian.co.uk/business/2009/mar/02/aig-insurance-loss)

I suppose he made a decision based on over-valued stock, but the fact that he was unaware of mounting difficulties, as CEO, how much more inside can you get?

I wanted a love song. ...:(

It was an aside paragraph in an article on the general woes of AIG and didn't go into the case anymore than that,

Regardless, here's the link (http://www.guardian.co.uk/business/2009/mar/02/aig-insurance-loss)

I suppose he made a decision based on over-valued stock, but the fact that he was unaware of mounting difficulties, as CEO, how much more inside can you get?

THAT depends on the corporate culture of the company. There have been notable instances of companies being basically run from the "upper management" tier, with the CEO, CFO, Board and President basically being mushroomed. If that was the case here, the CEO may not have known about the problem until it was far too late to take corrective measures.

THAT depends on the corporate culture of the company. There have been notable instances of companies being basically run from the "upper management" tier, with the CEO, CFO, Board and President basically being mushroomed. If that was the case here, the CEO may not have known about the problem until it was far too late to take corrective measures.

Fair enough, I find it hard to believe he can sue on the basis of that though, regardless of corporate culture, a CEO should have a good idea of the likely value of his stock.

If he made the decision to purchase deferred stock having left AIG, I can see a case, still, seems very odd.

Crazy, but still not as ridiculous as Pants Man (http://en.wikipedia.org/wiki/Pants_lawsuit).

Crazy, but still not as ridiculous as Pants Man (http://en.wikipedia.org/wiki/Pants_lawsuit).

What a tool! :tongue:

god damn it we just need to let these companies fail.

I suppose he made a decision based on over-valued stock, but the fact that he was unaware of mounting difficulties, as CEO, how much more inside can you get?
Well, the question is whether he was still CEO by the time he made this decision. Afterall, CEOs usually leave companies with big lumps of unissued shares in the form of options they got as part of their salaries or bonuses. The question to then cash these options in and actually get shares for them is an investment decision like any other.

Depending on the way the company treats these things, a former CEO can be pretty much shut out from the inside workings of the firm and must then make this decision like any other investor. If that was the case, AIG telling him that things were okay, prompting him to cash in the options, could be a case of securities fraud. Although it's obviously not the way the media or the public will see this, the fact that he was CEO of the firm becomes pretty much irrelevant.

from the OP
In a move also likely to raise eyebrows its former chief executive Hank Greenberg, who was ousted in 2005, said last night he would sue AIG for securities fraud. Greenberg said AIG's "material misrepresentations and omissions"...

Who's responsible in ultimo for "material misrepresentations and omissions" in a company's documentation?

I would guess that the CEO is - the buck stops on his desk!

So this is quite a suicidal move, I would guess; then again, I'm no expert about US laws.

from the OP


Who's responsible in ultimo for "material misrepresentations and omissions" in a company's documentation?

I would guess that the CEO is - the buck stops on his desk!

So this is quite a suicidal move, I would guess; then again, I'm no expert about US laws.

depends on the company's structure.
Some the board of directors hold more power. Id say no two companies governmental structures are alike.