Civil Complaint Against MBIA May Be Close

Federal and state authorities are reviewing a draft civil complaint against bond insurer MBIA Inc., the Wall Street Journal reported Thursday.

The newspaper, citing people familiar with the matter, said authorities may file civil fraud charges connected with MBIA's accounting for reinsurance, with a settlement possible in coming weeks.

Attorneys in New York Attorney General Eliot Spitzer's office and the Securities and Exchange Commission are reviewing the complaint, the Journal reported.

Separately, the U.S. attorney's office in Manhattan is seeking documents relating to an investigation of MBIA's accounting.

MBIA, of Armonk, N.Y., was not immediately available to comment. MBIA revealed in March that it improperly accounted for $70 million in proceeds from a reinsurance transaction in 1998. As a result, six years of financial statements were restated.

Since American International Group Inc. restated its earnings by $3.9 billion in May, state and federal authorities have been taking a close look at how certain insurers account for a finite-risk reinsurance, which can be manipulated to hide losses or inflate reserves.

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