The Five Dumbest Things on Wall Street This Week
2. C-GAITS. C-GAITS Run. Run, C-GAITS, Run.
We're feeling sorry for American International Group (AIG) this week.
Well, sort of.
On Monday, the insurance giant disclosed that the Securities and Exchange Commission may take legal action against the company.At issue are three press releases AIG issued related to some old transactions it had with PNC Financial Services (PNC) -- not the actual transactions, mind you, but press releases referring to the transactions. One of those press releases came out in January 2002, and two were issued last month. One of last month's press releases mentioned that an SEC investigation of AIG "involves certain transactions" marketed by AIG, "including three transactions" with PNC. Now, as we read that press release, we interpret that phrase "including three transactions" as meaning that more than three deals were under investigation. But the SEC's staff, AIG explained Monday, thinks that AIG was "false and misleading" by not mentioning five other transactions the feds believe were similar. Furthermore, the SEC staff believes AIG should have named the counterparties to these transactions. In other words, as far as we can tell, the SEC didn't just want AIG to tell the truth in its press releases; it wanted AIG to explain the whole truth, in detail, revealing every dark corner of the company's interaction with the SEC. What, are they crazy? What do they think a press release is for? It's for getting information out that's true, if not necessarily exhaustive in its ugliness -- sort of like the wedding announcements page in your local newspaper. We'd hate to see the SEC in charge of that. On the other hand, we note that in its defense of the 2002 press release, AIG seems to argue that the three PNC transactions -- which AIG calls C-GAITS -- are, like, totally, completely different from the other five transactions, known as GAITS. Hmmm. In deciding that question, we think it would help to know what C-GAITS and GAITS stand for. But an AIG spokesman won't tell us, or anyone else.
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