The U.S. Securities and Exchange Commission announced that it has charged a second senior executive from insurance company General Re for his role in aiding and abetting an alleged securities fraud committed by American International Group Inc.

The SEC filed an amended complaint today in federal court in Manhattan, adding Richard Napier (Gen Re senior vice president and the executive responsible for its relationship with AIG) as a defendant in the action it instituted on June 6 against John Houldsworth, a former Gen Re executive and former CEO of a Gen Re subsidiary, Cologne Re Dublin.

The amended complaint alleges that Napier, together with Houldsworth and others, helped AIG structure two sham reinsurance transactions, which had as their only purpose to allow AIG to add a total of US$500 million in phony loss reserves to its balance sheet in the fourth quarter of 2000 and the first quarter of 2001. The transactions were initiated by AIG to quell criticism by analysts concerning a reduction in the company’s loss reserves in the third quarter of 2000. These allegations have not been proven.

In partial settlement of the commission’s claims, without admitting or denying the allegations, Napier has consented to the entry of a partial final judgment, which resolves all issues of liability against him and defers the determination of disgorgement and penalties until a later date. As part of his settlement, Napier has agreed to cooperate fully with the SEC’s continuing investigation.

In connection with the same conduct, both Napier and Houldsworth have also entered guilty pleas to criminal charges filed by the U.S. Department of Justice in a Virginia federal court. Under the respective plea agreements, each defendant has agreed to cooperate fully with DOJ’s continuing investigation.

In addition to undertaking to cooperate, Napier is banned from serving as an officer or director of a public company for five years, civil penalties and disgorgement may follow.