Management Turnover as Change Agent

Tuesday, February 12, 2008

Is AIG's CEO, Martin Sullivan in Trouble?

Is AIG's AIG (NYSE) CEO, Martin Sullivan at risk to lose his job? Yesterday's surprise announcement (see 8k filing) that its auditor, Pricewaterhouse Coopers LLC, found "material weakness" in AIG's accounting for credit-default swap contracts translated into a huge drop in the company's stock. According to a story by Hugh Son and Jesse Westbrook in today's Bloomberg doubts are being raised by some concerning Sullivan's leadership.
"It is incomprehensible that yet once again, this company, its board, its CEO and CFO, and its independent auditors are saying the company doesn't have adequate controls," said Lynn Turner, former chief accountant at the U.S. Securities and Exchange Commission and now on the board of Guidance Software Inc. and the Colorado Public Employees' Retirement Association. "These people should all be held accountable."
The speculation on Sullivan's status at AIG seems premature for the moment. We will just have to wait and see. Stay tuned.

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