New York's highest court will hear arguments on Tuesday on whether to dismiss a lawsuit accusing Hank Greenberg of orchestrating sham transactions when he was head of insurance company American International Group Incorprated, Reuters reported on Tuesday.
New York Attorney General Eric Schneiderman dropped damages claims in the case 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.
David Boies, a prominent lawyer who represents Greenberg, said he would argue at Tuesday's hearing for a dismissal of the lawsuit.
"The case is over," Boies told Reuters on Friday.
Schneiderman disagreed. "Three consecutive attorneys general have pursued this case," said his spokesman, Damien Lavera. "Justice demands personal accountability for people who commit fraud, no matter how rich or well-connected they may be."
Eliot Spitzer, the New York attorney general at the time, brought the lawsuit in 2005. Andrew Cuomo, Spitzer's successor and now New York's governor, later oversaw the case.
It centers on two transactions in which AIG misled its shareholders. One, with General Re Corp, a unit of Warren Buffett's Berkshire Hathaway Inc, raised AIG's loss reserves by $500m without transferring risk. Another, with Capco Reinsurance Co, hid a $210m underwriting loss in an auto-warranty program.
At Tuesday's hearing, New York's Court of Appeals will hear Greenberg's effort to reverse lower court rulings that allowed the case against him and former AIG Chief Financial Officer Howard Smith to go forward.
MARTIN ACT
The appeal originally included a much-anticipated challenge to New York's Martin Act, the 1921 securities fraud statute that attorneys general Spitzer, Cuomo and Schneiderman have wielded against Wall Street since the early 2000s.
Boies was set to argue that the state attorney general lacks authority to recover damages on behalf of private entities.
Those arguments became moot on April 25, when Schneiderman dropped his damages claims against Greenberg and Smith.
"I'm disappointed, but I'm not going to complain," Boies said on Friday.
"I think the Martin Act issue is an important issue."
Regarding the state's remaining claim, Boies said he would tell the judges that the state could not seek injunctive relief now because it did not push for it in the lower courts.
"They have now abandoned the only claim they made in the trial court, which was a claim for damages," Boies said.
"Their attempt to keep the case alive by adding a new claim for injunctive relief should fail."
He said he might also argue that the state had wrongly relied on hearsay evidence to support the Gen Re claim.
