Deals & People October 3, 2008

AIG Advisory Groups Put Up for Sale

American International Group (AIG), which has three broker/dealer subsidiaries, is looking for ways to unload business units in a quest to pay back the federal government.
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The company announced a widespread asset sell-off in a bid to generate enough money to repay its $85-billion Federal Reserve loan and refocus the ailing insurer on its core property and casualty lines.

AIG plans to keep its U.S. property and casualty and foreign general insurance businesses and a continuing interest in its foreign life insurance operations, according to the announcement. Other than that, the company said its looking to sell the rest of its portfolio. According to published reports, the company has put up for sale its three independent broker/dealer firms: AIG Financial Advisors in Phoenix, FSC Securities Corp. in Atlanta, and Royal Alliance Associates in New York City.

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Specifically, it is “also actively at work on a number of alternatives” for its Financial Products business and its securities lending program, according to the AIG statement.

AIG’s intentions for its retirement services group were not immediately clear Friday, except for the admission in the company’s divestiture announcement that it would prefer to sell all of its U.S. life insurance operations in one piece. SunAmerica Life Insurance Co., is considered AIG’s lead retirement services company.

Compliance October 3, 2008

Stock-Drop Plaintiffs Win Skirmishes in Fifth Third Case

Plaintiffs in a January 2005 stock-drop and excessive fee case have won two legal skirmishes with a federal judge’s rulings certifying the case as a class action and refusing a request to throw out the lawsuit.
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A news release from the Scott and Scott law firm said the rulings came in a suit filed by Benjamin Shirk seeking to represent participants and beneficiaries in the Fifth Third Master Profit Sharing Plan. The case charged the bank and a number of its executives with mismanaging the plan and breaching their fiduciary duties under the Employee Retirement Income Security Act (ERISA).

Specifically, the suit alleges defendents breached their fiduciary duties by:

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  • investing the plan’s assets in Fifth Third stock at a time when it was imprudent to do so;
  • making material misrepresentations about Fifth Third stock and failing to provide complete and accurate information to participants and beneficiaries;
  • failing to monitor those persons or entities who were charged with managing the plan and its assets;
  • failing to avoid conflicts of interest with respect to the plan.

The plaintiffs also alleged the plan was charged excessive management fees—a claim the court refused to throw out in the recent rulings. The order refusing to dismiss the excessive fee allegations is here.

The bank was the target of a new stock-drop case filed in mid-August by a Fifth Third employee in Florida (see Fifth Third Slapped with Stock-Drop Participant Lawsuit).

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