Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, October 15, 2008

NYAG Tells AIG to Account for Fraudulent Conveyances

The New York Attorney General sent AIG expressing its displeasure with certain of the company's recent  expenditures even as the company is being bailed out by the U.S. taxpayers and calling them "fraudulent conveyances."  Here, to give you the flavor, is the first paragraph of the letter:

Over the past several months, this Office has become aware of unwarranted and outrageous expenditures by American International Group, Inc. ("AIG") even as the company slipped towards insolvency. As you of course know, the taxpayers of this country are now supporting AIG through rescue financing, which makes such expenditures even more irresponsible and damaging. As described below, we demand that the Board of Directors (the  "Board") cease and desist any such further expenditures, and review, rescind, and recover all past unreasonable expenditures. The Board must also immediately institute new protections to prevent future abuses, and provide this Office with an accounting of executive compensation and benefits. We hereby place AIG and its Board on notice that this Office will seek appropriate sanctions and remedies if the Board does not comply.

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