AIG (AIG): Betters Earnings Through Lying?

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By Douglas A. McIntyre Published
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It is beginning to look like the Feds think AIG (AIG) may have misled investors when it valued some of the securities it held. Is it OK to cover-up earnings numbers? Perhaps AIG thought it would work if they didn’t get caught.

According to The Wall Street Journal, the SEC is looking into whether AIG "overstated the value of contracts linked to subprime mortgages." Now the Justice Department wants to have a look.

It is understandable that AIG would want to have its paper look as good as possible. It did loses $20 billion in the last quarter.

It is not clear who within AIG may have been involved in handling the valuations and the calculations which led to them. Sometime, somewhere, that is almost certain to come out.

AIG now faces a new category of threat. It will have to argue that its management was unusually stupid or defend itself against shareholders who may claim that the firm committed fraud.

Being stupid is better.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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