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22 February 2017

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Greenberg ends epic battle with NY AG over AIG deals

Dan Ascher 16 February 2017

Maurice "Hank" Greenberg quietly put an end to 12 years of arguments, appeals and court appearances today as the former AIG boss foreclosed on what promised to be the insurance trial of a generation.

The final coda came after New York Supreme Court Judge Charles Ramos in Manhattan approved a $9.9mn settlement that state Attorney General (AG) Eric Schneiderman had hammered out with Greenberg and former AIG CFO Howard Smith.

With the accord, the prosecutor and the two executives resolved civil securities fraud charges related to two deals made when they ran the company, concluding a legal battle that had cost millions of dollars and risen all the way to the US Supreme Court.

The afternoon hearing before Judge Ramos marked an unspectacular end to the battle's final skirmish, which blew up after Schneiderman publicised the agreement last week, setting off days and nights of claims and counterclaims between the insurance veteran and the AG.

The spat was over what Schneiderman asserted was in the accord and what Greenberg said he had actually agreed to, through the services of mediator Ken Feinberg.

Late last Friday, Schneiderman issued a public statement to the effect that Greenberg had admitted to "initiating, participating in and approving" two "sham" transactions at the heart of the case.

The release baited a furious response from Greenberg lawyer David Boies, who derided the statement as "false and misleading." The famed barrister declared that the AG's case had "totally collapsed" during trial proceedings that began last September but were suspended after the 91-year-old Greenberg had testified for several days.

Schneiderman's assertions put Greenberg on the offensive, culminating in a briefing for reporters on Monday in which he criticised Schneiderman and predecessor Eliot Spitzer, who had initiated the case in 2005.

But in today's hearing, the rancour was absent and tensions appeared to have died down as legal teams for both sides joked with each other as they presented the agreement to the judge. He called it "happy news".

Prosecutors in court described it as "good news" and said the money would go to the state, prompting the judge to rub his hands in humorous acceptance. Greenberg agreed to pay $9mn, while Smith will hand over $900,000.

Judge Ramos alluded to some of the media coverage around the case and reassured the parties that any leaks had not come from his chambers. Then he asked the lawyers for both sides to thank their clients.

The settlement requires Greenberg and Smith to pay the agreed on funds within five working days. The case officially will close once Schneiderman confirms the payment to the court.

In a statement crafted as part of the settlement, Greenberg said that he had "initiated, participated in and approved" the two transactions at issue, but didn't use the word admit in any of its forms.

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