Zurich agrees to pay penalty to US regulator
Zurich Financial Services is to pay a penalty of $25 million (SFr29.6 million) to settle charges from the United States Securities and Exchange Commission.
The SEC had complained that the group had artificially inflated performance figures of its reinsurance unit, Zurich Re, which was spun off as Converium and last year taken over by Scor of France.
The US regulator argued that as a result of the action, Zurich managed to book “a significant windfall” in 2001 at the time of the initial public offering.
In a statement, Zurich Financial said it had decided it was in the best interests of the company to resolve the matter with the SEC to avoid the burden, expense and potential enforcement proceedings by the commission.
“This was a scheme by former executives of Zurich Re, and later Converium, to manipulate their performance results through sham transactions and improper accounting,” commented an SEC enforcement officer.
“It had the effect of artificially boosting Converium’s market standing and IPO offering price, causing significant harm to the investing public.”
Under the terms of the settlement, Zurich did not admit or deny the SEC’s findings.
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