I told you no one ever won any money betting against Hank Greenberg. While I was skeptical he would triumph over his old firm, AIG, in a court battle of the titans over funds allegedly set aside for executive compensation, wondering whether this would be his “last stand,” the jury's verdict in his favor has turned out to be his last laugh.
I wasn't alone in my conviction that AIG had the upper hand in this high-profile trial. Indeed, 43 percent of those responding to NU's latest online poll said the verdict would go AIG's way. But it was not to be.
As reported by NU's Mark Ruquet earlier this week, “a federal jury in Manhattan rejected a claim by American International Group that Starr International Company (SICO), headed by Maurice Greenberg, was obligated to hold shares of AIG stock in trust for retiring AIG employees.”
The trial went on for three weeks, with Mr. Greenberg taking the witness stand for seven grueling days of testimony. Yet the jury took only a few hours to come to its verdict in favor of AIG's former chair and CEO.
The trial was no walk in the park, as noted by Mr. Ruquet's story: “AIG attorney Theodore Wells hammered away at Mr. Greenberg, trying to impeach his testimony, and accused him of lying while on the witness stand.”
But Mr. Greenberg kept his cool and in the end got a measure of revenge after having to leave AIG under a cloud following revelations that the company had misused finite reinsurance deals to artificially bolster its balance sheet–a crime for which five individuals, including one from AIG, were convicted in a separate court.
“We are gratified by the jury's quick and complete vindication of Starr International and Mr. Greenberg, and the jurors' quick and complete rejection of the outrageous personal attacks on Mr. Greenberg's character by AIG and its counsel,” said a representative for SICO.
The legal proceedings are not quite over, as U.S. District Judge Jed S. Rakoff must yet decide whether there was an express trust or breech of fiduciary duty by SICO in its dealings with AIG.
However, with Mr. Ruquet reporting that the judge had said “in an order before the trial began that the jury's decision on this issue would be used in an advisory capacity,” the odds of AIG prevailing on this point appear to be long indeed after the jury so quickly rejected its basic claim.
We'll know for certain next month, when Judge Rakoff is expected to issue his decision. In the meantime, I imagine Mr. Greenberg is sleeping quite peacefully these days.
As for AIG, this is yet another setback in what is turning out to be the worst 12-month period in the company's long history.
“We are disappointed by the jury's verdict and we await the court's final ruling. We continue to believe in the merits of our case,” AIG said in a statement.
If I were AIG, I wouldn't hold my breath. Would you?
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