Daily Archives: May 26, 2005

The Lord sues AIG and Greenberg

Posted on by
Reply

Spitzer13.jpgNew York AG (“Attorney General” or “Aspiring Governor,” take your pick) Eliot Spitzer and the New York State Insurance Department filed a civil lawsuit today against American International Group, Inc and its two former top executives — former CEO Maurice R. “Hank” Greenberg and former CFO Howard I. Smith — alleging that the two executives orchestrated a scheme that allowed AIG to manipulate its financial results and mislead regulators and investors.
After managing AIG into one of the world’s largest financial companies over the past 40 years, Mr. Greenberg resigned as AIG’s CEO and chairman this past March under pressure from the AIG Board and Mr. Spitzer. At around the same time, Mr. Smith was fired as AIG’s CFO for allegedly refusing to cooperate with Mr. Spitzer’s investigation, although Mr. Spitzer had made clear by that time that both Mr. Greenberg and Mr. Smith were targets of his parallel criminal investigation. Here are previous posts on the saga of Mr. Spitzer’s investigation of AIG and Berkshire Hathaway’s General Reinsurance Corp, and here is a copy of the complaint and Mr. Spitzer’s press release regarding the complaint.
Greenberg5.jpgThere is really nothing much new in the complaint, which was filed in State Supreme Court in Manhattan and seeks damages and disgorgement of profits from the allegedly illegal transactions. The Lord of Regulation alleges that Mr. Greenberg orchestrated wrongdoing in “an apparent effort to improve the company’s financial results,” even as AIG “was a well-run and profitable company that didn’t need to cheat.” The complaint does not address the fact that the transactions in question were approved by AIG and its independent auditors. The Securities & Exchange Commission and Justice Department are also investigating AIG, but neither is involved in Mr. Spitzer’s civil lawsuit.
AIG8.jpgMeanwhile, AIG and its auditors, PricewaterhouseCoopers LLP, are working to finish the company’s delayed annual report by the company’s self-imposed May 31 deadline. Still remaining to be seen is whether AIG can weather an Enronesque meltdown now that the Lord has deemed Mr. Greenberg’s earnings management strategies as illegal, and to ponder the importance of good timing in going bust. AIG’s shares have lost almost a quarter of their value since Mr. Spitzer announced his campaign against AIG on February 12, closing today at $55.71 compared to a value of $73.12 on Friday, Feb. 11.

The BBC on the NatWest Three

Posted on by
Reply

Natwest three2.jpgIn its inimitable style, the B.B.C. has produced a news video segment on the three U.K. bankers who have been dubbed the “NatWest Three” (earlier posts here) in the Enron case. To view the video:

Go to this site.
Hit the “Launch” button, which produces a new window.
In the new window, scroll down on the right hand side to the April 20 hyperlink, “Million Dollar Manhunt.” The video plays in RealPlayer.

bbc2.gifIt’s always entertaining to hear the British pronounce “Houston.” Also, the piece is definitely not complimentary of the Federal Detention Center in downtown Houston. Finally, it seems in the video as if Philip Hilder (Sherron Watkins‘ attorney) is doubling as a spokesman for the Enron Task Force. ;^)
By the way, this Glasgow Herald article provides an interesting U.K. perspective on the NatWest Three case, including the following comment from a Glasgow University law professor:

“Three questions arise here. Firstly, will they receive a fair trial, second, would the sentence be out of proportion with European norms and thirdly, is there a real risk of other forms of mistreatment either in detention conditions or more usual the infliction of violence?”

Brewing rebellion against Metro?

Posted on by
Reply

metroraillogo2.gifTory Gattis runs the smart blog, Houston Strategies. In this post, Tory notes Metro’s less-than-robust rail ridership figures (see this earlier post) and then describes litigation that Metro could be facing in the near future if Metro’s ridership trends continue.
Great. Add litigation attorneys as another interest group favoring misguided rail plans. ;^)

“It’s not the arrow, it’s the Indian”

Posted on by
Reply

golfer.jpgIf you are contemplating a purchase of new golf clubs, make sure that you read this first.
As David Feherty comments:

“Maybe we’re all supposed to stink at this. It’s our punishment for playing this insane game.”

By the way, if you are really interested in improving your golf game and not just hitting longer drives, read this.

Study favors bypass surgery over angioplasty

Posted on by
1

heart surgery.jpgThe New England Journal of Medicine yesterday published the findings of a large-scale study that indicate that angioplasty — an increasingly popular invasive procedure for patients with blocked coronary arteries — carries a higher risk of death over the long term than open-heart bypass surgery. The researchers were led by Edward L. Hannan, chairman of the Department of Health Policy Management and Behavior at the University at Albany School of Public Health.
The study is particularly significant because it raises questions regarding the shift in treatment for blocked coronary arteries over the past decade or so — the shift away from coronary bypass surgery in favor of angioplasty, which involves sliding a balloon into an artery through a small incision and then propping it open with a wire-mesh stent.
Inasmuch as angioplasty procedures require a far shorter recovery time and lower risk of in-hospital complications than bypass surgery, it is currently performed more than one million times a year in the U.S., which is about three times the rate of bypass operations. Bypass surgery generally costs between $25,000 to $35,000 while angioplasties run from around $10,000 to $15,000.
The study involved a review of almost 60,000 patients from 1997 through 2000 with serious heart disease in two government databases in New York state. Researchers concluded that those with three blocked arteries who received stents were 1.56 times as likely to die within three years as those who had bypass surgery. Similarly, those with two blocked arteries who got stents were 1.33 times as likely to die as those who had bypass surgery. Finally, over a third of the angioplasty patients required either surgery or additional stents within three years, while only 5% of the bypass surgery patients required either angioplasty or further surgery within the same period. The researchers note that the study does not include findings on the newer generation of drug-coated stents, which some cardiologists believe will improve the outcome for angioplasty.
This large scale study adds to an increasing number of smaller studies finding advantages of bypass surgery over angioplasty for long-term survival. Last year, a Cleveland Clinic study that followed 6,000 patients found that the risk of death over time was more than twice as high in the angioplasty group of relatively high-risk patients.
Both the Cleveland Clinic and New York studies involved review of registry data and not the controlled clinical trials that scientists consider the best form of evidence. In registry studies, researchers must adjust existing data for various factors, which can lead to debate and criticism over the effect such adjustments have on the ultimate findings of the study. Nevertheless, registry data studies allow the reearchers to involve much larger patient groups than clinical trials and to evaluate medical practices that are being most commonly performed in the medical marketplace.

Prosecution rests in the Enron Broadband trial

Posted on by
Reply

EBS7.jpgThe prosecution rested Wednesday in the Enron Broadband trial, about five weeks after the beginning of the trial. Here are previous posts on the trial.
The trial has been a strange one. Looking like a tap-in for the prosecution at the beginning, the prosecution committed some early blunders, such as allowing its key witness to testify falsely regarding a video shown to the jury and then compounding that mistake by attempting to blame the error on a clearly intimidated woman who previously provided video services for Enron. At that point, the trial was looking really interesting.
Unfortunately, the fireworks did not last long. The trial quickly descended into mind-numbing boredom, noted here and here. Thus, when the Enron Task Force prosecutors advised U.S. District Judge Vanessa Gilmore that they expected that it was going to take at least a week to ten days longer to complete presentation of their case-in-chief than they originally predicted, a jury rebellion nearly broke out. It’s exceedingly difficult to read if a jury is blaming the prosecution or the defense for such delays, but the lawyers on both sides accelerated examination of witnesses over the past week in an attempt to get the trial back on course. Inasmuch as the defense side of this type of case normally does not take as long as the lawyers originally predict, my sense is that the trial is back on track to conclude by late June.
Despite their early mistakes, the Enron Task Force prosecutors ended their case-in-chief by eliciting testimony about the “elephant in the courtroom” — i.e., the large amount of money that three of the former Enron executives-defendants made on stock sales during the period in which the prosecution alleges that they were making false public statements about Enron Broadband’s prospects. That is clearly the strength of the prosecution’s case, and expect the prosecutors to hammer that point again and again throughout the remainder of the trial.
The defense team begins presentation of their case today. Let’s hope they liven things up a bit.