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Sec v. Am. Int'l Group, Inc.

United States District Court, District of Columbia

May 16, 2013

SECURITIES & EXCHANGE COMMISSION, Plaintiff,
v.
AMERICAN INTERNATIONAL GROUP, INC., Defendant

For SECURITIES AND EXCHANGE COMMISSION, Plaintiff: Laura Britton Josephs, LEAD ATTORNEY, SECURITIES & EXCHANGE COMMISSION, Division of Enforcement, Washington, DC; Linda Chatman Thomsen, LEAD ATTORNEY, DAVIS POLK & WARDELL, LLP, Washington, DC; Mark A. Adler, LEAD ATTORNEY, SECURITIES & EXCHANGE COMMISSION, Washington, DC.

For AMERICAN INTERNATIONAL GROUP, INC., Defendant: William H. Jeffress, Jr., LEAD ATTORNEY, BAKER BOTTS L.L.P., Washington, DC.

For SUE REISINGER, Intervenor: John Joshua Wheeler, THOMAS JEFFERSON CENTER FOR THE PROTECTION OF FREE EXPRESSIO, Charlottesville, VA.

OPINION

Gladys Kessler, United States District Judge.

Page 110

MEMORANDUM ORDER

This civil action brought by the Securities and Exchange Commission (" SEC" ) against the American International Group (" AIG" ) under the Securities Act of 1933, 15 U.S.C. § 77a et seq., the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., and Rules promulgated pursuant to the Securities Exchange Act, is now before the Court on Sue Reisinger's Second Motion Seeking Release of Reports and Notifications of the Independent Consultant [Dkt. No. 33]. Upon consideration of the Motion, the Opposition, and the Reply, the Court concludes that Ms. Reisinger's Motion must be denied.

I. BACKGROUND

On November 30, 2004, the SEC filed a Complaint against AIG, alleging violations of federal securities laws [Dkt. No. 1]. On the same date, the SEC submitted to the Court the Consent of Defendant American International Group, Inc. (" Consent Order" [Dkt. No. 1-1]. In this document, AIG consented to entry of Final Judgment without admitting or denying the allegations of the Complaint. The Court entered Final Judgment, incorporating the Consent Order, on December 7, 2004 [Dkt. No. 2].

Under the terms of the Consent Order, AIG agreed to take on two main responsibilities. First, AIG consented to establish

Page 111

a Transaction Review Committee to review transactions taking place after the entry of Final Judgment. The Committee was charged with setting up procedures to identify transactions that would involve heightened legal, reputational, or regulatory risk. Under the Consent Order, these transactions require review and approval by the Committee before they can be completed.

Second, AIG agreed to retain an independent consultant, selected by the Fraud Section of the Department of Justice and acceptable to the SEC, to review the Transaction Review Committee's policies and procedures as well as all transactions that AIG entered into between January 1, 2000, and the date of the Final Judgment and that had " a primary purpose of enabling a Reporting Company to obtain an accounting or financial reporting result." Consent Order ¶ 3a.1. The purpose of the review of past transactions was for the Independent Consultant to determine whether they were used or designed to permit counter-parties to violate generally accepted accounting principles (" GAAP" ) or rules promulgated by the SEC. These transactions formed the basis of the SEC's Complaint.

At the conclusion of his or her review, the consultant was required to provide copies of reports of his or her findings (" IC Reports" ) to the SEC, the DOJ, and AIG's Audit Committee. AIG was then required to implement all reasonable recommendations made by the consultant. If AIG violated certain designated provisions of the Consent Order, the SEC was permitted to petition the Court to vacate the Final Judgment and restore the action to its active docket, i.e., to proceed with litigating the Complaint. Further, the Court retained ...


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