Some of Wall Street’s biggest firms are using accounting tricks – over-valuing assets and booking risky investments in jurisdictions with lax transparency – to make life insurance companies look more financially healthy than they are. These actions, documented by Lucy Komisar for 100 Reporters with support from the Fund, risk the pensions of millions of people. Komisar found that three of the largest insurance companies have set up a complex web of lightly regulated affiliates offshore or in five lenient states. They have overstated assets that would be valued at zero under standard U.S. accounting practices and diverted cash from insurance premiums into riskier investments. These moves have prompted concern on Capitol Hill. Senate Banking Committee Chairman Sherrod Brown (D-Ohio), said at a recent hearing, “We know that workers end up worse off when Wall Street private equity firms get involved. We’ve seen it over and over.”
Grantee report uncovers how Wall Street firms endanger pensions with accounting gimmicks
