AIG 2014 Annual Report Download - page 303

ITEM 8 / NOTE 16. CONTINGENCIES, COMMITMENTS AND GUARANTEES
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Various regulatory and governmental agencies have been reviewing certain transactions and practices of AIG and our
subsidiaries in connection with industry-wide and other inquiries into, among other matters, certain business practices of
current and former operating insurance subsidiaries. We have cooperated, and will continue to cooperate, in producing
documents and other information in response to subpoenas and other requests.
AIG’s Subprime Exposure, AIGFP Credit Default Swap Portfolio and Related Matters
AIG, AIGFP and certain directors and officers of AIG, AIGFP and other AIG subsidiaries have been named in various actions
relating to our exposure to the U.S. residential subprime mortgage market, unrealized market valuation losses on AIGFP’s
super senior credit default swap portfolio, losses and liquidity constraints relating to our securities lending program and related
disclosure and other matters (Subprime Exposure Issues).
Consolidated 2008 Securities Litigation. Between May 21, 2008 and January 15, 2009, eight purported securities class
action complaints were filed against AIG and certain directors and officers of AIG and AIGFP, AIG’s outside auditors, and the
underwriters of various securities offerings in the United States District Court for the Southern District of New York (the
Southern District of New York), alleging claims under the Securities Exchange Act of 1934, as amended (the Exchange Act), or
claims under the Securities Act of 1933, as amended (the Securities Act). On March 20, 2009, the Court consolidated all eight
of the purported securities class actions as In re American International Group, Inc. 2008 Securities Litigation (the
Consolidated 2008 Securities Litigation).
On May 19, 2009, the lead plaintiff in the Consolidated 2008 Securities Litigation filed a consolidated complaint on behalf of
purchasers of AIG Common Stock during the alleged class period of March 16, 2006 through September 16, 2008, and on
behalf of purchasers of various AIG securities offered pursuant to AIG’s shelf registration statements. The consolidated
complaint alleges that defendants made statements during the class period in press releases, AIG’s quarterly and year-end
filings, during conference calls, and in various registration statements and prospectuses in connection with the various
offerings that were materially false and misleading and that artificially inflated the price of AIG Common Stock. The alleged
false and misleading statements relate to, among other things, the Subprime Exposure Issues. The consolidated complaint
alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Sections 11, 12(a)(2), and 15 of the Securities Act. On
August 5, 2009, defendants filed motions to dismiss the consolidated complaint, and on September 27, 2010, the Court denied
the motions to dismiss.
On April 26, 2013, the Court dismissed all claims against the outside auditors in their entirety, and it also reduced the scope of
the Securities Act claims against AIG and defendants other than the outside auditors.
On July 15, 2014, lead plaintiffs and all defendants except AIG’s outside auditors accepted a mediator’s proposal to settle the
Consolidated 2008 Securities Litigation for a cash payment by AIG of $960 million (the AIG Settlement). On August 1, 2014,
lead plaintiff and AIG’s outside auditors accepted a mediator’s proposal to resolve the Consolidated 2008 Securities Litigation
for a cash payment by the outside auditors (the Auditor Settlement and, collectively with the AIG Settlement, the
Settlement). On October 7, 2014, the Court granted lead plaintiff’s Motion for Preliminary Approval of Settlement and Approval
of Notice to the Class and scheduled a final settlement approval hearing for March 20, 2015. The deadline for parties to
exclude themselves from the Settlement passed on January 5, 2015. The Settlement remains subject to final approval by the
Court. On October 22, 2014, AIG made a cash payment of $960 million, which is being held in escrow pending final approval
of the AIG Settlement and which will be returned if the AIG Settlement is not approved. The AIG Settlement amount has been
accrued.
Individual Securities Litigations. Between November 18, 2011 and September 16, 2013, nine separate, though similar,
securities actions were filed asserting claims substantially similar to those in the Consolidated 2008 Securities Litigation
against AIG and certain directors and officers of AIG and AIGFP (one such action also names as defendants AIG’s outside
auditor and the underwriters of various securities offerings). Two such actions have been voluntarily dismissed; the remainder
are now pending in the Southern District of New York. On January 20, 2015, AIG and other defendants filed motions to dismiss
some or all of the claims asserted in all such actions pending as of that date. On February 2, 2015, and February 9, 2015, two
additional securities actions were filed in the Southern District of New York asserting claims substantially similar to those in the
Consolidated 2008 Securities Litigation against AIG (one of the two actions also names as defendants certain directors and
officers of AIG and AIGFP, and AIG’s outside auditor and certain of AIG’s underwriters during the relevant period).