Skip to content

Kudos to Corporate Counsel and its lawyers. Its self-laudatory account is below. Good to see media investigation and reporting instead of just repeating spin ! 

 

CorpCounsel Wins Release of AIG Corporate Monitor Reports

Corporate Counsel

April 17, 2012

 

A federal judge Monday ordered American International Group Inc. and the Securities and Exchange Commission to make public the corporate monitor reports on AIG leading up to the economic collapse of 2008. It is believed to be the first time a court has ordered a monitor’s reports to be released.

The motion seeking access was filed by senior reporter Sue Reisinger of CorpCounsel and its parent company ALM Media. In granting it, U.S. District Judge Gladys Kessler in Washington, D.C., said the monitor reports could be redacted to delete AIG’s proprietary information. 

Kessler wrote [PDF]:

Given the financial meltdown of 2008, the recession it spawned, and the suffering the country has endured because of it, and given the role that AIG played in that financial meltdown, the public needs to know whether the obligations AIG undertook in [a 2004] consent order were complied with, whether the SEC was carrying out its enforcement and monitoring responsibilities . . . , and what, if any, role the compliance—or noncompliance—with the consent order may have played in the devastating events of 2008.

The motion was prepared by attorney Joshua Wheeler, of the Thomas Jefferson Center For The Protection Of Free Expression, based in Charlottesville, Virginia, with assistance from students in the University of Virginia’s law school clinic. Wheeler said he was aware of no other case in which a court ordered a monitor’s reports to be opened.

Kessler thwarted one of the motion’s arguments, saying the First Amendment does not apply in this civil case. But she ruled that there is a common law right of access to judicial records. 

The reports of the monitor, or as AIG called him, independent consultant, “are relevant to the judicial function and therefore are properly considered judicial records,” she wrote. “The reports themselves may give rise to a substantive judicial decision in this case.”

Reacting to the ruling, Wheeler said, “Judge Kessler’s decision properly recognizes the critical need for the public and press to have access to judicial records such as these in order to effectively monitor the actions of our government. As Thomas Jefferson wrote, ‘An informed citizenry is the only true repository of the public will.’ ”

In their joint motion opposing the unsealing, AIG and the SEC had argued that the reports are not “judicial records” subject to public access, and that the release would be “inconsistent with the need for confidentiality” to protect AIG’s business interests.

Attorneys for the SEC and AIG didn’t immediately return messages seeking comment, nor answer questions about a possible appeal. 

Government attorney Laura Josephs represents the SEC, along with outside counsel Linda Thomsen, who is a partner at Davis Polk & Wardwell as well as a former director of the SEC’s enforcement division. William Jeffress, Jr., a partner at Baker Botts in D.C., represents AIG. 

The case began in November 2004 when the SEC filed a complaint against AIG for securities violations. Filed with it was a $126 million settlement that included a consent order in which the company neither admitted nor denied wrongdoing. 

In the consent order, AIG agreed to set up a transaction review committee and to retain a monitor selected by the Department of Justice.

The man selected for the job was James Cole, then a partner at Bryan Cave in D.C. and now deputy attorney general in the U.S. Department of Justice. Although the monitor’s job was supposed to last only three years, subsequent securities violations by AIG kept the court case open and Cole on board. 

Cole began monitoring AIG in January 2005 and filed periodic reports with the SEC until he accepted the deputy AG job in January 2011. Until now, the SEC has refused to release those reports to the public.

See also: "AIG and SEC File Joint Motion Opposing CorpCounsel Info Request," CorpCounsel, February 2012.