Today the Securities & Exchange Commission filed charges that AIG’s former CEO Maurice “Hank” Greenberg and former CFO Howard Smith were involved in numerous improper accounting moves while running the insurance giant. The two men settled without admitting guilt. Greenberg will pay a penalty of $15 million, Smith $1.5 million.

The SEC’s claim is that the two executives used these maneuvers to create the impression that the company was consistently meeting or exceeding key earnings and growth targets. Similar charges were filed earlier this week by the SEC against General Electric Corp., though in that case the moves the company made were quite different.

At issue at AIG, according to the complaint filed in US District Court for the Southern District of New York, were: “sham” reinsurance transactions designed to make it appear that the insurer had increased its loss reserves, when it had not; a deal with an offshore shell entity that seems to have concealed underwriting losses from AIG’s auto-warranty insurance business; and other transactions that juiced the company’s investment income and allow it to improperly recognized capital gains.

“Corporate leaders cannot avoid the truth and consequences of their companies’ performance by using improper accounting gimmicks and signing off on distorted financial reports,” said Robert Khuzami, director of the SEC’s Division of Enforcement, in a statement. Yesterday Khuzami announced several new enforcement powers being given his division that could increase its activity in the months to come.

AIG previously settled charges over the same matter for $800 million in fines and disgorgement. In 2005 the company restated many of its prior transactions.

A call put into Mr. Greenberg’s attorney on this matter, Greg Morvillo was referred to another attorney for Mr. Greenberg at the law firm of Boies, Schiller & Flexner. That attorney did not respond to a message seeking comment.

Mr. Smith’s attorney Andrew M. Lawler sent via email this statement on his client’s behalf: “Some of the transactions in the Complaint filed by the SEC today are almost ten years old. Although Mr. Smith was originally inclined to litigate this matter, resolving the SEC matter allows him to move forward with his life without the added legal costs and distraction of this lawsuit.”

The original is here: BusinessWeek – Management IQ