U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21235 / October 1, 2009
Accounting and Auditing Enforcement Release No. 3062 / October 1, 2009
SECURITIES AND EXCHANGE COMMISSION V. RONALD FERGUSON, ELIZABETH MONRAD, CHRISTIAN MILTON, ROBERT GRAHAM AND CHRISTOPHER GARAND; Case No. 06 Civ 0778 (S.D.N.Y.) (LAP)
SEC OBTAINS JUDGMENTS AGAINST ONE AIG AND FOUR GEN RE FORMER EXECUTIVES FOR AIDING IN AIG SECURITIES FRAUD
The Securities and Exchange Commission today announced that the United States District Court for the Southern District of New York entered final judgments against five former senior executives of General Re Corporation (Gen Re) and American International Group, Inc. (AIG) for their roles in helping AIG mislead investors through the use of fraudulent reinsurance transactions. Four of the former executives, Ronald Ferguson, Elizabeth Monrad, CPA, Robert Graham, Esq., and Christopher Garand, worked for Gen Re, while the fifth, Christian Milton, worked for AIG.
On February 2, 2006, the Commission filed its civil action against the defendants, alleging that they aided and abetted AIG’s violations of the antifraud and other provisions of the securities laws. The complaint alleged that Ferguson, Monrad, Graham, Garand, and others at Gen Re worked with Milton and others at AIG to fashion two sham reinsurance contracts between Cologne Re Dublin, a Gen Re subsidiary in Dublin, Ireland, and an AIG subsidiary. The sham reinsurance transactions made it appear that AIG had legitimately increased its general loss reserves.
Without admitting or denying the allegations in the complaint, the defendants each consented to the entry of a final judgment, permanently enjoining them from violating or aiding and abetting violations of Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Exchange Act of 1934 (Exchange Act) and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1. Defendants also consented to officer and director bars. In separate administrative proceedings, Monrad and Graham were suspended from appearing and practicing before the Commission.
On February 25, 2008, in a criminal action filed by the U.S. Attorney’s Office for the Eastern District of Virginia, and tried in the U.S. District Court for the District of Connecticut, United States v. Ronald E. Ferguson, et al., D. Conn. No. 3:06-CR-137 (CFD), a jury returned a guilty verdict on all sixteen felony counts against all five defendants in connection with the AIG sham reinsurance transactions. All five defendants subsequently were sentenced to serve terms of imprisonment and to pay monetary penalties. In determining to accept defendants’ settlement offers in which they consented to final judgments, the Commission considered the sanctions the court ordered against them in the criminal proceedings.
The SEC previously charged AIG in 2006 with securities fraud and improper accounting, and the company settled the charges by paying disgorgement of $700 million and a penalty of $100 million, among other remedies.