Federal prosecutors have dropped their investigation of Joseph Cassano, the former chief executive of an American International Group unit that insured the mortgage-related securities and played a large role in the near collapse of the global financial system in 2008, the Wall Street Journal reported Friday.
Citing people familiar with the matter, the Journal story said prosecutors will not bring charges against former and current AIG executives for their role in financial contracts that nearly brought down the insurer about two years ago.
The highly publicized investigation focused on Cassano, who headed a London-based unit of AIG called Financial Products, the story said. Andrew Forster and Tom Athan, who worked in Cassano’s unit, were also targets of the probe.
The investigation concerned whether the executives deceived investors and the firm’s outside auditor about AIG’s financial exposure from contracts known as credit-default swaps that were tied in part to mortgages. A series of meetings with the targets of the probe changed the course of the investigation, as prosecutors obtained information about Cassano’s disclosures to AIG senior executives and AIG’s outside auditor.
But the Securities and Exchange Commission hasn’t ruled out bringing a civil fraud suit for securities violations, according to the Journal.
Cassano’s attorneys, Joseph Warin and Jim Walden, released the following statement for their firm, Gibson, Dunn & Crutcher LLP:
We are very happy for our client. Although a 2-year, intense investigation is tough for anyone, the results are wholly appropriate in light of our client’s factual innocence. The large group of federal agents and prosecutors was diligent and professional throughout the investigation, and our client is grateful that they did their jobs by following the facts to the end. This result was the product of 2 things: an innocent client and fair prosecutors and agents. The system worked.