SEC Press press_release 7 KB 3,631 chars

SEC Charges a Second Former Gen Re Executive for Aiding in AIG Securities Fraud

Release: 2005-88
Caption: Securities and Exchange Commission v. Criminal Charges Filed By Doj, et al.

summary

Richard Napier, a former Gen Re Senior Vice President, aided and abetted a $500 million securities fraud by helping AIG structure sham reinsurance transactions to inflate loss reserves, resulting in a SEC settlement with permanent injunctions, a five-year officer/director ban, and criminal guilty pleas alongside cooperation with ongoing investigations.

paragraph

The SEC charged Richard Napier, former Senior Vice President of General Re Corporation, with aiding and abetting AIG’s $500 million securities fraud through two sham reinsurance transactions in late 2000 and early 2001 designed to artificially boost loss reserves. Napier, who managed Gen Re’s relationship with AIG, collaborated with fellow executive John Houldsworth to create these fraudulent deals, violating Sections 10(b), 13(a), 13(b)(2), and 13(b)(5) of the Securities Exchange Act. In settlement, Napier consented to a partial final judgment permanently enjoining him from future violations, barring him from serving as a public company officer or director for five years, and deferring disgorgement and penalties, while also pleading guilty to criminal charges and agreeing to cooperate with the SEC and DOJ investigations.

narrative

Richard Napier, a former Senior Vice President of General Re Corporation (Gen Re), was charged by the SEC with aiding and abetting a $500 million securities fraud committed by American International Group (AIG) through two sham reinsurance transactions in the fourth quarter of 2000 and first quarter of 2001. These transactions were structured to artificially inflate AIG’s loss reserves in response to analyst criticism over declining reserves, with Napier—responsible for Gen Re’s relationship with AIG—collaborating with fellow Gen Re executive John Houldsworth to create the fraudulent deals. The SEC’s amended complaint alleged violations of Sections 10(b), 13(a), 13(b)(2), and 13(b)(5) and related rules of the Securities Exchange Act of 1934. In a partial settlement, Napier consented to a permanent injunction barring future securities law violations, a five-year ban from serving as an officer or director of a public company, and deferred determination of civil penalties and disgorgement, without admitting or denying the allegations. Simultaneously, Napier and Houldsworth each pleaded guilty to criminal charges filed by the U.S. Department of Justice’s Fraud Section and agreed to fully cooperate with ongoing investigations by both the SEC and DOJ. The SEC and DOJ continue to pursue other parties involved in the fraud, underscoring their joint commitment to holding all participants accountable for enabling financial deception. This case highlights how intermediaries like Gen Re executives can be held liable for constructing the contractual mechanisms that enable large-scale corporate fraud.

Enriched metadata

Scheme: corporate-fraud (100%)
Court: Southern District of New York
Outcome: settled

Classified corporate-fraud(confidence 100%). EDGAR detection: forms 10-K/10-Q/8-K· recall 56% / precision 8%. detection rule →

Extracted insights

Dollar amounts 1

$500.00M $500 million $100M–$1B

Entities 8

scheme_term aig securities fraud
agency criminal charges filed by doj
person john houldsworth
person phony loss reserves
person richard napier
scheme_term richard napier for aiding and abetting securities fraud
agency Securities and Exchange Commission
person sham reinsurance transactions

Triples 13

SEC charged Richard Napier for aiding and abetting securities fraud
Richard Napier was Gen Re Senior Vice President
Richard Napier aided and abetted AIG securities fraud
Napier and Houldsworth helped structure two sham reinsurance transactions
Sham Reinsurance Transactions allowed AIG to add $500 million in phony loss reserves
Phony Loss Reserves added to balance sheet in Q4 2000 and Q1 2001
Richard Napier entered guilty plea to criminal charges filed by DOJ
John Houldsworth was former Gen Re executive and former CEO of Cologne Re Dublin
John Houldsworth entered guilty plea to criminal charges filed by DOJ
SEC filed amended complaint on June 10, 2005
Richard Napier consented to partial final judgment with disgorgement and penalties deferred
Richard Napier was barred from serving as officer or director of public company for five years
AIG initiated transactions to quell analyst criticism concerning reduction in loss reserves

View original SEC press releasesec.gov

Extracted body text (3,631c)

SEC CHARGES A SECOND FORMER GEN RE EXECUTIVE FOR AIDING IN AIG SECURITIES FRAUD FOR IMMEDIATE RELEASE 2005-88 Washington, D.C., June 10, 2005 - The Securities and Exchange Commission announced today that it has charged a second senior executive of General Re Corporation, Richard Napier, for his role in aiding and abetting a securities fraud committed by American International Group, Inc. In an amended complaint filed today in federal court in Manhattan, the Commission added Napier as a defendant in the action it instituted on June 6, 2005, against John Houldsworth, a former Gen Re executive and former CEO of a Gen Re subsidiary, Cologne Re Dublin. Napier was a Gen Re Senior Vice President and the executive responsible for Gen Re's relationship with AIG. The amended complaint alleges that Napier, together with Houldsworth and others, helped AIG structure two sham reinsurance transactions that had as their only purpose to allow AIG to add a total of $500 million in phony loss reserves to its balance sheet in the fourth quarter of 2000 and the first quarter of 2001. The transactions were initiated by AIG to quell criticism by analysts concerning a reduction in the company's loss reserves in the third quarter of 2000. In partial settlement of the Commission's claims, without admitting or denying the allegations, Napier has consented to the entry of a partial final judgment, which resolves all issues of liability against him and defers the determination of disgorgement and penalties until a later date. As part of his settlement, Napier has agreed to cooperate fully with the Commission's continuing investigation of this matter. In connection with the same conduct, both Napier and Houldsworth have also entered guilty pleas to criminal charges filed by the U.S. Department of Justice, Fraud Section (DOJ) in a Virginia federal court. Under the respective plea agreements, each defendant has agreed to cooperate fully with DOJ's continuing investigation. Linda Chatman Thomsen, Director of the Commission's Division of Enforcement, said, "With each settlement, we move closer to our objective, which is to hold all responsible persons accountable for their actions in this financial fraud." Mark K. Schonfeld, Director of the Commission's Northeast Regional Office, said, "These cases send a message that we will hold accountable those who knowingly help to create the contractual building blocks on which a securities fraud is built." The Commission's amended complaint charges Napier with aiding and abetting the violations by AIG and others of Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) and Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1 of the Securities Exchange Act of 1934. Napier, in addition to undertaking to cooperate fully with the Commission, consented to the entry of a partial final judgment permanently enjoining him from future violations of the above-cited provisions, barring him from serving as an officer or director of a public company for five years following the entry of the partial final judgment against him and deferring the determination of civil penalties and disgorgement to a later date. The Commission's investigation is continuing. The Commission acknowledges the assistance and cooperation of the U.S. Department of Justice Criminal Fraud Division and the U.S. Postal Inspection Service in this matter. See also: Litigation Release Contacts: Mark K. Schonfeld (212) 336-1020 Director, Northeast Regional Office Andrew M. Calamari (212) 336-0042 Associate Director, Northeast Regional Office http://www.sec.gov/news/press/2005-88.htm Home | Previous Page Modified: 06/10/2005

OCR text (3,631c · plain-text · 99% conf)