Former AIG Exec Cassano May Face U. S. Fee

 

Tuesday, Sep 15,2009, 12:48:24 PM   Click:

NEW YORK (Reuters) - Federal prosecutors are preparing to have a grand jury to consider whether to indict former senior American International Group executive Joseph Cassano, the Wall Street Journal reported Friday.

The report, citing sources familiar with the matter said prosecutors are investigating whether the actions of Cassano to the head of AIG Financial Products unit, which has triggered near-bankruptcy of the parent company and its recovery by taxpayers, is a fraud by overestimating the value of contracts tied to mortgages and failing to disclose important facts about them to the outside auditor for AIG.

The grand jury provided in the AIG (AIG) cases have also been weighing charges against other employees, the newspaper said.

In other news regarding AIG, analysts at Wells Fargo downgraded its rating to underperform, saying the current premium at which AIG shares are trading isn't justified.

"Typically, premiums to book value are reserved for insurance companies that are earning in excess of their cost of capital," Wells Fargo said. " It doesn't take much math for us to see AIG is not among that group."

Moreover, "a reasonable case could be made that the company has virtually no tangible book value at the moment," the analysts said in arguing that AIG shares deserve to be deeply discounted.