
Even as AIG posts its largest quarterly loss in the history of Wall Street, and announced it was accepting another $30 billion government infusion, the company is reeling from a battle between its founder and current CEO.
On Monday, Maurice "Hank" Greenberg filed a suit in federal court in Manhattan against the company, alleging it perpetrated securities fraud.
According to Bloomberg, he said:
The company's "material misrepresentations and omissions" caused him to acquire New York-based AIG shares in his deferred compensation profit-participation plan at an "artificially inflated price."
The suit was filed the same day embattled AIG CEO Edward Liddy told Bloomberg News that Greenberg was at in charge when the AIG unit that caused much of the damage was created.
"I think he's responsible" for some of the insurer's struggles... "The formation of the AIGFP unit, which has literally brought us to our knees, that happened on his watch. The compensation systems that have gone astray, happened on his watch. I don't think it's as clean and simple as sometimes Hank would like to portray."
While the exact damage to Greenberg's wallet wasn't specified, the New York Post reported Greenberg owned 3.7 million shares of AIG stock under this deferred-compensation package in January 2008. The lawsuit demands a return of $70 million in taxes the AIG founder paid on the $200 million in stock.
Greenberg said Liddy's attacks "are apparently designed to deflect attention from AIG's disastrous performance since Mr. Greenberg retired four years ago, and to distract attention from its wasteful use of shareholder and taxpayer funds since that time," according to a statement received by the New York Post.
The embattled Liddy was appointed in September to run the giant insurer after it agreed to turn over 80% of the company to the government in exchange for an $85 billion bailout. On Monday, it announced it would need another $30 billion.
AIG is also trying to convince the government the company's failure would carry systemic risk that could cause the entire insurance industry to falter, according to this story in the New York Times.
The company's stock is trading relatively flat, at around $0.47 a share.
Greenberg tells CNBC he lost $2 billion, discusses the company's losses.
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