WASHINGTON (Dow Jones/AP) — The Securities and Exchange Commission prevailed in the first case to go to trial involving the fraudulent use of a product called finite insurance, announcing on Friday that a federal jury found a former Brightpoint Inc. employee liable for aiding the company's fraud.Timothy Harcharik, a director of risk management until he was fired in February 2002, was first charged by the SEC in September 2003. He was the only one of the three former Brightpoint employees to be charged at that time who declined to settle with the agency.

Products often called finite insurance combine conventional insurance with financing techniques. For a user to apply favourable insurance accounting, the contracts must pass significant risk from the insured to the insurer. If not, the transaction may be more akin to a loan, which the SEC says produce different accounting results.

"I am gratified with this result," said Mark Schonfeld, the director of the SEC's Northeast regional office. "Cracking down on the abuse of so-called finite insurance and reinsurance to cook the books of public companies has been a priority for us. This verdict makes clear that such conduct is fraud, plain and simple."

The SEC more than three years ago announced a $10 million civil penalty against American International Group Inc. for helping Brightpoint overstate earnings with a bogus insurance policy.

The agency used the case to send a message that financial services firms would be held liable for engaging in transactions that a client used to inflate earnings.

The jury returned its verdict after four days, the SEC said. Judge Harold Baer Jr., of federal court in Manhattan, will determine the sanctions to be imposed on Harcharik at a later date.

An attorney for Harcharik couldn't immediately be reached for comment.