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Securities Class Action Lawsuit Filed Against AIG
Source: Business Wire
Published: May 23, 2005
A class action lawsuit was filed in the U.S. District Court for the Southern District of New York, on behalf of all persons who purchased securities of American International Group, Inc. ("AIG") between October 1, 1999 and March 30, 2005 (the "Class Period").
The lawsuit alleges that the defendants made false statements and concealed material information concerning AIG's financial condition and accounting practices relating to, among other items, non-traditional insurance products, assumed reinsurance transactions, and use of affiliated entities for executive compensation.
Defendants named in the class action include AIG, C.V. Starr & Co., Inc., Star International Inc., General Reinsurance Corporation, Maurice Greenberg, Howard Smith, Christian Milton, and L. Michael Murphy.
Furthermore, plaintiffs allege that AIG structured transactions for the primary purpose of accomplishing a desired accounting result, including a sham reinsurance deal set up with defendant General Reinsurance Corporation to bolster reserves, transactions with supposedly independent companies that were in fact controlled by AIG, mis-classified losses, and questionable estimates on deferred acquisition costs.
In February 2005, AIG said it received subpoenas from New York Attorney General Eliot Spitzer and the Securities and Exchange Commission regarding some its products that might be used by companies to smooth earnings.
The lawsuit contends that class members suffered damages from this specific conduct. Plaintiffs allege that, between February 14, 2005, when AIG first disclosed that it had received subpoenas from the SEC and Sptizer, and April 1, 2005, after AIG issued a press release relating to this conduct, AIG's share value fell approximately 30%.
AIG has since announced a need to restate its financial statements for the years ended December 31, 2003, 2002, 2001 and 2000, the quarters ended March 31, June 30, and September 30, 2004 and 2003, and the quarter ended December 31, 2003, and that its prior financial statements for those periods should no longer be relied upon.
Plaintiff's action seeks to pursue claims related to the alleged misconduct that was not revealed until 2005 and manifested by the loss of share value in 2005.
Read Full Story at Business Wire