American International Group is asking a federal judge to prevent Maurice Greenberg, its former chief executive, from suing the federal government on its behalf. The insurer had already decided it wasn’t going to file a lawsuit against the federal government over its bailout that took place during the economic crisis.
Greenberg, who has filed a $25 billion securities lawsuit against the US, is pursuing derivative claims for the company. He claims that the bailout’s “onerous” terms cost the insurer’s investors billions.
While AIG isn’t trying to stop Greenberg from suing on his behalf or for other shareholders, the insurance giant has made it clear that suing the government over the rescue isn’t where it wants to focus its energy and resources. In its filing, AIG notes that according to Delaware Law, Greenberg, through Starr Investment, cannot take over the right of the AIG board to make the call on whether/not to sue.
All of AIG’s directors were unanimous in their decision not to have AIG join Greenberg’s securities lawsuit. He, however, claims that they succumbed to government pressure.
In its filing, AIG argues that its decision not to sue makes sense, seeing as the board believes that securities claims that Starr is making on its behalf may not be ‘slam dunk… winner,’ contrary to his claims. The insurer says that its own counsel thinks that chances of the derivatives lawsuit proving to be a success are “low.” They also believe that such litigation would harm AIG’s image, brand, and relationships with regulators, shareholders, customers, and elected officials while negatively impacting its attempts to rebuilding itself and pay back everything it owes the government.
A.I.G. Says It Will Not Join Lawsuit Against Government, New York Times, January 9, 2013
AIG Request to Bar Greenberg Derivative Lawsuit, Scribd
More Blog Posts:
Texas Securities Fraud: IMS Securities Settles FINRA Case Alleging Inadequate Supervision of Wholesale Representatives, Stockbroker Fraud Blog, March 27, 2013
Goldman Sachs Execution and Clearing Must Pay $20.5M Arbitration Award in Bayou Ponzi Scam, Upholds 2nd Circuit, Institutional Investor Securities Blog, July 14, 2012