SEC charges General Re Corporation for its role in AIG and Prudential Accounting fraud – The US Securities and Exchange Commission (SEC) has issued a complaint against General Re Corporation (Gen Re) for its involvement in assisting American International Group (AIG) and Prudential Financial Inc. with setting up sham transactions to manipulate their financial statements. The SEC alleged that a foreign subsidiary of Gen Re knowingly entered into two sham reinsurance transactions with AIG in 2000 to allow it to reverse its declining reserve trend and dishonestly report additions to both loss reserves and premiums.
Gen Re has agreed to pay $12.2 million to settle the SEC’s charges as well as pay a sum to the US Postal Inspection Service Consumer Fraud Fund and fund a settlement of a civil class action by AIG’s affected shareholders.
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