The Securities and Exchange Commission has charged a second senior executive of General Re Corporation, Richard Napier, for his role in aiding and abetting a securities fraud committed by American International Group, Inc.

In an amended complaint filed in federal court in Manhattan, the SEC added Napier as a defendant in the action it instituted on June 6, 2005, against John Houldsworth, a former Gen Re executive and former CEO of a Gen Re subsidiary, Cologne Re Dublin.

Napier was a Gen Re Senior Vice President and the executive responsible for Gen Re’s relationship with AIG. The amended complaint alleges that Napier, together with Houldsworth and others, helped AIG structure two sham reinsurance transactions that had as their only purpose to allow AIG to add a total of $500 million in phony loss reserves to its balance sheet in the fourth quarter of 2000 and the first quarter of 2001. The transactions were allegedly initiated by AIG to quell criticism by analysts concerning a reduction in the company’s loss reserves in the third quarter of 2000.

Without admitting or denying the allegations, Napier has consented to the entry of a partial final judgment, which resolves all issues of liability against him and defers the determination of disgorgement and penalties until a later date. As part of his settlement, Napier has agreed to cooperate fully with the SEC’s continuing investigation of this matter.

In connection with the same conduct, both Napier and Houldsworth have also entered guilty pleas to criminal charges filed by the U.S. Department of Justice in a Virginia federal court. Under the respective plea agreements, each defendant has agreed to cooperate fully with DOJ’s continuing investigation.

“With each settlement, we move closer to our objective, which is to hold all responsible persons accountable for their actions in this financial fraud,” Linda Chatman Thomsen, director of the SEC’s division of enforcement, said,

“These cases send a message that we will hold accountable those who knowingly help to create the contractual building blocks on which a securities fraud is built,” maintained Mark K. Schonfeld, director of the SEC’s Northeast office, said,

The SEC’s amended complaint charges Napier with aiding and abetting the violations by AIG and others of sections of the Securities Exchange Act of 1934. Napier, in addition to undertaking to cooperate fully with the SEC, consented to the entry of a partial final judgment permanently enjoining him from future violations of the above-cited provisions, barring him from serving as an officer or director of a public company for five years following the entry of the partial final judgment against him and deferring the determination of civil penalties and disgorgement to a later date.

Berkshire Hathaway, the Omaha, Neb., holding company that owns General Re, fired Napier after learning of his plea. Houldsworth also was fired after word of his agreement surfaced.

In a statement accompanying his plea agreement, Napier said he was told in October 2000 by Gen Re’s CEO at the time, Ronald E. Ferguson, that then-AIG CEO Maurice R. “Hank” Greenberg asked Ferguson to help devise a transaction that would increase AIG’s loss reserves by $500 million on paper without actually transferring any risk to AIG.

“Napier was directed to help AIG complete this transaction and was told it would be best to complete the Gen Re side of the transaction outside of the United States,” according to the statement.

Gen Re received a $5 million fee for setting up the AIG deals, according to court documents.

Napier and Houldsworth each face a maximum of five years in prison upon sentencing.

The SEC said its investigation is continuing.

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