US regulators consider charging Greenberg

Maurice "Hank" Greenberg, the former chief executive of American International Group, could face civil charges for his alleged role in overstating the insurance giant's financial strength.

Mr Greenberg was sent a "Wells notice" by the US Securities and Exchange Commission last week in connection with reinsurance transactions between AIG and Berkshire Hathaway's General Re in 2000. A Wells notice indicates that the SEC is considering civil charges and gives the recipient the chance to persuade the watchdog not to press charges.

District Judge Christopher Droney said last Friday that there was "sufficient evidence" to show that a financial conspiracy started with a phone call from Mr Greenberg.

Judge Droney oversaw a trial that resulted in convictions of former AIG and General Re executives for artificially boosting AIG's loss reserves to make the world's biggest insurer look financially stronger to investors.

Mr Greenberg resigned as AIG's chairman and chief executive in 2005 during an investigation into alleged financial wrongdoing. The 83-year-old, who hasn't been charged by the SEC or federal prosecutors, has said he did nothing wrong in the reinsurance transaction with General Re that led to the conviction of five former executives.

Mr Greenberg's lawyer, Robert Morvillo, told the Wall Street Journal that the Wells notice was "a step in the process". He added: "None of the remaining issues are material to AIG's financial statements. When the commission has had the opportunity to consider all the facts, we believe that they will agree."

News of the notice served on Mr Greenberg coincides with a hefty penalty imposed on an AIG business in the UK by the Financial Services Authority. The City watchdog fined UNAT Direct Insurance Management £640,000 for lack of control and oversight over its appointment of call centres.

UNAT, which has nine call centres in Britain, did not prevent its staff from telling centres to start selling to customers before it completed checks on the centres' suitability. UNAT's senior management also did not have enough information to be sure that the centres were suitable, the FSA said.

In one case, a call centre sold products for more than 250 days before appropriate checks were carried out; in another, a centre sold 4,000 policies over six months before it was authorised by the FSA.

Margaret Cole, the director of enforcement at the FSA, said: "Selling general insurance products to consumers through call centres involves greater risk. UNAT was aware of the higher risk but failed to carry out proper checks on the call centres it used." UNAT's fine would have been £800,000 if it had not settled early with the FSA, which is issuing harsher penalties for slack practice in retail financial services.