We took another quick look at that press release that AIG released in November 2007 about its third quarter earnings — which is now reportedly being looked at by federal investigators as evidence that the firm may have deliberately misled investors.
And here’s one line that jumps out. The release quotes CEO Martin Sullivan saying:
AIGFP reported an operating loss in the quarter due principally to the unrealized market valuation loss related to its super senior credit default swap portfolio. Although GAAP requires that AIG recognize changes in valuation for these derivatives, AIG continues to believe that it is highly unlikely that AIGFP will be required to make any payments with respect to these derivatives. (our itals)
Of course, we all know how that turned out.
This is hardly the only statement like this from an AIG exec expressing a rosy view of the company’s position as late as the fall of 2007. But it’s certainly a striking one.
There have been suggestions that Sullivan himself is among the AIG execs under scrutiny for misleading statements. Could this quote be one of the reasons?