Tuesday, August 2, 2011

Criminal Process/Insurance: Second Circuit Vacates GenRe Convictions, Remands for New Trial

On August 2, the U.S. Court of Appeals for the Second Circuit vacated the convictions of four executives of General Reinsurance Corporation (“Gen Re”) and one of American International Group, Inc. (“AIG”) on charges of of conspiracy, mail fraud, securities fraud, and making false statements to the
Securities and Exchange Commission, and remanded the case for a new trial. The Court found that the convictions had to be vacated because at trial in the U.S. District Court for the District of Connecticut, the district court abused its discretion by admitting certain prejudicial stock-price data to show the material effect of a particular transaction, known as the Loss Portfolio Transfer (LPT), on investors. The Court also held that the district court had issued a jury instruction that did not include either side's causation instruction, but directed the verdict on causation.

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