AIG 2009 Annual Report Download - page 305

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
amended complaint was filed asserting the same claims. On February 4, 2010, the parties filed a stipulation staying the
action in favor of the Consolidated 2007 Derivative Litigation. On February 9, 2010, the Court signed a stipulation
staying this action pending resolution of the Consolidated 2007 Derivative Litigation.
Action by the Starr Foundation — Supreme Court of New York. On May 7, 2008, the Starr Foundation filed a
complaint in New York State Supreme Court against AIG, AIG’s former Chief Executive Officer, Martin Sullivan,
and AIG’s former Chief Financial Officer, Steven Bensinger, asserting a claim for common law fraud. The complaint
alleges that the defendants made materially misleading statements and omissions concerning alleged multi-billion
dollar losses in AIG’s portfolio of credit default swaps. The complaint asserts that if the Starr Foundation had known
the truth about the alleged losses, it would have sold its remaining shares of AIG Common Stock and alleges that the
Starr Foundation has suffered damages of at least $300 million. On May 30, 2008, a motion to dismiss the complaint
was filed on behalf of defendants. After a hearing, the complaint was dismissed. On December 23, 2008, plaintiff filed
a notice of appeal and a decision on the appeal is pending. Under the AIG/Greenberg MOU, SICO agreed to
indemnify AIG for any amounts paid by AIG to the Starr Foundation as damages or settlement amounts in this
action, and for reasonable legal fees and expenses incurred in defending this action after the date of the AIG/
Greenberg MOU.
Canadian Securities Class Action — Ontario Superior Court of Justice. On November 13, 2008, an application was
filed in the Ontario Superior Court of Justice for leave to bring a purported securities fraud class action against AIG,
AIGFP, certain of AIG’s current and former officers and directors, and the former Chief Executive Officer of AIGFP.
If the Court grants the application, a class plaintiff will be permitted to file a statement of claim against AIG. 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 May 29, 2009, the applicant filed responding
affidavits and an amended draft statement of claim. The factual allegations are generally the same as those alleged in
the Consolidated 2008 Securities Litigation. On November 20 and 30, and December 4, 2009, defendants filed briefs
in support of their motions to dismiss, and those motions are pending.
Panama Action — Tribunal del Circuito Civil, Panama City, Panama. On February 26, 2009, SICO sought
permission to file a complaint in Panamanian Court against AIG. In the complaint, SICO alleges that AIG
intentionally concealed from its shareholders, including SICO, its unstable financial situation and risk of losses, which
ultimately resulted in losses to the value of SICO’s shares of AIG Common Stock. On August 12, 2009, AIG filed a
motion to dismiss the complaint and a motion for correction of the complaint. On August 13, 2009, AIG filed a
motion with the Panama Supreme Court challenging on constitutional grounds a motion by SICO to amend the
complaint. Under the AIG/Greenberg MOU, SICO agreed to undertake to dismiss this action with prejudice. On
February 10, 2010, the parties filed a joint request to dismiss the case, which is subject to Court approval.
Litigation Matter Relating to AIGFP. On September 30, 2009, Brookfield Asset Management, Inc. and Brysons
International, Ltd. (together, ‘‘Brookfield’’) filed a complaint against AIG and AIGFP in the Southern District of
New York. Brookfield seeks a declaration that a 1990 interest rate swap agreement between Brookfield and AIGFP
(guaranteed by AIG) terminated upon the occurrence of certain alleged events that Brookfield contends constituted
defaults under the swap agreement’s standard ‘‘bankruptcy’’ default provision. Brookfield claims that it is excused
from all future payment obligations under the swap agreement on the basis of the purported termination. At
December 31, 2009, the estimated present value of expected future cash flows discounted at LIBOR was $1.2 billion.
It is AIG’s position that no termination event has occurred and that the swap agreement remains in effect. A
determination that AIG triggered a ‘‘bankruptcy event of default’’ under the swap agreement could, depending on the
Court’s precise holding, affect other AIG or AIGFP agreements that contain the same or similar default provisions.
Such a determination could also affect derivative agreements or other contracts between third parties, such as credit
default swaps under which AIG is a reference credit, which could affect the trading price of AIG securities. On
December 17, 2009 defendants filed a motion to dismiss, and that motion is pending.
297 AIG 2009 Form 10-K