AIG 2013 Annual Report Download - page 310

On January 31, 2012 and February 1, 2012, amended complaints were filed in the Court of Federal Claims and the
Southern District of New York, respectively.
In rulings dated July 2, 2012 and September 17, 2012, the Court of Federal Claims largely denied the United States’
motion to dismiss in the SICO Treasury Action. Discovery is proceeding.
On November 19, 2012, the Southern District of New York granted the FRBNY’s motion to dismiss the SICO New
York Action. On December 21, 2012, SICO filed a notice of appeal in the United States Court of Appeals for the
Second Circuit. On January 29, 2014, the Second Circuit affirmed the Southern District of New York’s dismissal of
the SICO New York Action.
In both of the actions commenced by SICO, the only claims naming AIG as a party (as a nominal defendant) are
derivative claims on behalf of AIG. On September 21, 2012, SICO made a pre-litigation demand on our Board
demanding that we pursue the derivative claims in both actions or allow SICO to pursue the claims on our behalf. On
January 9, 2013, our Board unanimously refused SICO’s demand in its entirety and on January 23, 2013, counsel for
the Board sent a letter to counsel for SICO describing the process by which our Board considered and refused
SICO’s demand and stating the reasons for our Board’s determination.
On March 11, 2013, SICO filed a second amended complaint in the SICO Treasury Action alleging that its demand
was wrongfully refused. On June 26, 2013, the Court of Federal Claims granted AIG’s and the United States’ motions
to dismiss SICO’s derivative claims in the SICO Treasury Action and denied the United States’ motion to dismiss
SICO’s direct claims.
On March 11, 2013, the Court of Federal Claims in the SICO Treasury Action granted SICO’s motion for class
certification of two classes with respect to SICO’s non-derivative claims: (1) persons and entities who held shares of
AIG Common Stock on or before September 16, 2008 and who owned those shares on September 22, 2008; and
(2) persons and entities who owned shares of AIG Common Stock on June 30, 2009 and were eligible to vote those
shares at AIG’s June 30, 2009 annual meeting of shareholders. SICO has provided notice of class certification to
potential members of the classes, who, pursuant to a court order issued on April 25, 2013, had to return opt-in
consent forms by September 16, 2013 to participate in either class. On November 15, 2013, SICO informed the
Court that 286,892 holders of AIG Common Stock during the two class periods had opted into the classes.
While no longer a party to these actions, AIG understands that SICO is seeking significant damages.
The United States has alleged, as an affirmative defense in its answer, that AIG is obligated to indemnify the FRBNY
and its representatives, including the Federal Reserve Board of Governors and the United States (as the FRBNY’s
principal), for any recovery in the SICO Treasury Action, and seeks a contingent offset or recoupment for the value
of net operating loss benefits the United States alleges that we received as a result of the government’s assistance.
On November 8, 2013, the Court denied a motion by SICO to strike the United States’ affirmative defenses of
indemnification and contingent offset or recoupment.
The FRBNY has also requested indemnification in connection with the SICO New York Action from AIG under the
FRBNY Credit Facility and from ML III under the Master Investment and Credit Agreement and the Amended and
Restated Limited Liability Company Agreement of ML III.
On December 9, 2009, AIG Global Real Estate Investment Corporation’s (AIGGRE) former President, Kevin P.
Fitzpatrick, several entities he controls, and various other single purpose entities (the SPEs) filed a complaint in the
Supreme Court of the State of New York, New York County against AIG and AIGGRE (the Defendants). The case
was removed to the Southern District of New York, and an amended complaint was filed on March 8, 2010. The
amended complaint asserted that the Defendants violated fiduciary duties to Fitzpatrick and his controlled entities and
breached Fitzpatrick’s employment agreement and agreements of SPEs that purportedly entitled him to carried
interest arising out of the sale or disposition of certain real estate. Fitzpatrick has also brought derivative claims on
behalf of the SPEs, purporting to allege that the Defendants breached contractual and fiduciary duties in failing to
fund the SPEs with various amounts allegedly due under the SPE agreements. Fitzpatrick also requested injunctive
relief, an accounting, and that a receiver be appointed to manage the affairs of the SPEs. He further alleged that the
SPEs were subject to a constructive trust. Fitzpatrick also alleged a violation of ERISA relating to retirement benefits
purportedly due. Fitzpatrick claimed that he was owed damages totaling approximately $274 million (inclusive of
Employment Litigation against AIG and AIG Global Real Estate Investment Corporation
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AIG 2013 Form 10-K292
ITEM 8 / NOTE 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES
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