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Compliance April 4, 2011
AIG Stock-Drop Claims Survive Dismissal Attempt
American International Group (AIG) must face claims by some current
and former employees that their retirement funds were invested too heavily
in company stock, Bloomberg is reporting.
Reported by Fred Schneyer
U.S. District Judge Laura Taylor Swain ruled AIG and some directors, including former board member and Chief Executive Officer Martin Sullivan must defend allegations of a breach of fiduciary duty in a lawsuit filed in 2008. She dismissed claims by participants in a Puerto Rican unit’s retirement plan.
According to Bloomberg, the judge said the remaining plaintiffs can try to prove that they sustained losses to their pension plans caused by the defendants breaching their duty by continuing to invest in AIG stock even when the company was on life-support; shares fell 97% in 2008.
“Plaintiffs have sufficiently alleged that AIG and the director defendants were aware of the increasingly risky financial position maintained by AIG, material weaknesses in AIG’s financial health and the potential impending erosion of the value of AIG’s stock,” Swain wrote, according to Bloomberg.
Mark Herr, an AIG spokesman, said in an e-mail to Bloomberg: “We’re pleased the court dismissed portions of the case and will defend vigorously against the remaining claims.”