This one was inevitable…
The Wall Street Journal reports that AIG Financial Products exec Joseph Cassano could soon be indited for securities fraud. Cassano’s would be just the second major criminal prosecution stemming from the credit crisis.
WSJ: Federal prosecutors, capping an 18-month investigation, are preparing to impanel a grand jury in Brooklyn, N.Y., to consider an indictment of a former senior American International Group Inc. executive, according to people familiar with the matter.
The Justice Department and the Securities and Exchange Commission have been investigating whether Joseph Cassano, whose AIG Financial Products unit nearly brought down the insurer a year ago, committed securities fraud in allegedly misleading investors by overstating the value of mortgage-related contracts and failing to disclose material facts about them to AIG’s outside auditor, the people said.
This has been a long time coming.
Cassano denies wrongdoing. His lawyer, F. Joseph Warin, has said AIG was fully aware of Cassano’s activities, and has cooperated with the inquiry, WSJ notes.
Others could be next in the probe of AIG’s CDS businesses:
The planned grand jury in the AIG case also could weigh charges against other employees. The possible case against Mr. Cassano and others could rely partly on tape recordings of 2007 phone calls involving AIG Financial Products employees who discussed the value of derivatives trades known as credit-default swaps, these people said.
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