AIG 2011 Annual Report Download - page 327

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
•Superior Court for the State of California, Los Angeles County. On November 20, 2009, a purported
shareholder derivative complaint was filed in the Superior Court for the State of California, Los Angeles
County, naming as defendants certain directors and officers of AIG and its subsidiaries. On February 9,
2010, the case was stayed.
Southern District of New York. On January 4, 2011, Wanda Mimms, a participant in the AIG Incentive Savings
Plan (the Plan), filed a purported derivative action on behalf of the Plan in the United States District Court for
the Southern District of New York against PricewaterhouseCoopers, LLP (PwC) and asserting a claim for
professional malpractice in conducting audits of AIG’s 2007 financial statements. The complaint, as amended on
April 20, 2011, also asserts a claim for breach of fiduciary duty under ERISA against members of the Plan’s
Retirement Board for failing to pursue a claim for professional malpractice on behalf of the Plan against PwC. On
July 6, 2011, the Plan and defendants filed motions to dismiss the amended complaint. On February 16, 2012, the
Court granted the motions to dismiss and dismissed the amended complaint without leave to replead.
Canadian Securities Class Action – Ontario Superior Court of Justice. On November 12, 2008, an application was
filed in the Ontario Superior Court of Justice for leave to bring a purported class action against AIG, AIGFP,
certain directors and officers of AIG and Joseph Cassano, the former Chief Executive Officer of AIGFP, pursuant
to the Ontario Securities Act. If the Court grants the application, a class plaintiff will be permitted to file a
statement of claim against defendants. The proposed statement of claim would assert a class period of
November 10, 2006 through September 16, 2008 (later amended to March 16, 2006 through September 16, 2008)
and would allege that during this period defendants made false and misleading statements and omissions in
quarterly and annual reports and during oral presentations in violation of the Ontario Securities Act.
On April 17, 2009, defendants filed a motion record in support of their motion to stay or dismiss for lack of
jurisdiction and forum non conveniens. On July 12, 2010, the Court adjourned a hearing on the motion pending a
decision by the Supreme Court of Canada in another action with respect to similar issues raised in the action
pending against AIG.
In plaintiff’s proposed statement of claim, plaintiff alleged general and special damages of $500 million, and
punitive damages of $50 million plus prejudgment interest or such other sums as the Court finds appropriate. As
of February 23, 2012, the Court has not determined whether it has jurisdiction or granted plaintiff’s application to
file a statement of claim and no merits discovery has occurred. As a result, AIG is unable to reasonably estimate
the possible loss or range of losses, if any, arising from the litigation.
Starr International Litigation — On November 21, 2011, Starr International Company, Inc. (SICO) filed a
complaint against the Department of the Treasury in the United States Court of Federal Claims, bringing claims,
both individually and on behalf of all others similarly situated and derivatively on behalf of AIG (the Starr
Treasury Action). The complaint challenges the government’s assistance of AIG, pursuant to which AIG entered
into the FRBNY Credit Facility and the Department of the Treasury received an approximately 80 percent
ownership in AIG. The complaint alleges that the interest rate imposed on AIG and the appropriation of
approximately 80 percent of AIG’s equity was discriminatory, unprecedented, and inconsistent with liquidity
assistance offered by the Government to other comparable firms at the time and violated the Equal Protection,
Due Process, and Takings Clauses of the U.S. Constitution.
On the same day that SICO commenced the Starr Treasury Action, SICO also filed a second complaint in the
United States District Court in the Southern District of New York, this one against the FRBNY bringing claims,
both individually and on behalf of all others similarly situated and derivatively on behalf of AIG. This complaint
also challenges the Government’s assistance of AIG, pursuant to which AIG entered into the FRBNY Credit
Facility and the Department of the Treasury received an approximately 80 percent ownership in AIG. The
complaint alleges that the FRBNY owed fiduciary duties to AIG as a controlling shareholder of AIG, and that the
FRBNY breached these fiduciary duties by ‘‘divert[ing] the rights and assets of AIG and its shareholders to itself
and favored third parties’’ through transactions involving ML III, an entity controlled by FRBNY, and by
AIG 2011 Form 10-K 313