AIG 2014 Annual Report Download - page 305

ITEM 8 / NOTE 16. CONTINGENCIES, COMMITMENTS AND GUARANTEES
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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.
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.
In the SICO Treasury Action, 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 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.
286,908 holders of AIG Common Stock during the two class periods have opted into the classes.
Trial in the SICO Treasury Action began in the Court of Federal Claims on September 29, 2014, and witness testimony
concluded on November 24, 2014. SICO argued during trial that the two classes are entitled to a total of approximately $40
billion in damages, plus interest. The parties are in the process of post-trial briefing.
While AIG is no longer a party to the SICO Treasury Action, 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.
AIG believes that any such indemnification obligation would arise only if: (a) SICO prevails on its claims at trial and receives an
award of damages and prevails through any appellate process; (b) the United States commences an action against AIG
seeking indemnification; and (c) the United States is successful in such an action through any appellate process. If SICO
prevails on its claims and the United States seeks indemnification from AIG, AIG intends to assert defenses thereto. A final
determination that the United States is liable for damages, together with a final determination that AIG is obligated to indemnify
the United States for any such damages, could have a material adverse effect on our business, consolidated financial
condition and results of operations.
False Claims Act Complaint
On February 25, 2010, a complaint was filed in the United States District Court for the Southern District of California by two
individuals (Relators) seeking to assert claims on behalf of the United States against AIG and certain other defendants,
including Goldman Sachs and Deutsche Bank, under the False Claims Act. Relators filed a first amended complaint on
September 30, 2010, adding certain additional defendants, including Bank of America and Société Générale. The first
amended complaint alleged that defendants engaged in fraudulent business practices in respect of their activities in the over-
the-counter market for collateralized debt obligations, and submitted false claims to the United States in connection with the
FRBNY Credit Facility and Maiden Lane II LLC (ML II) and Maiden Lane III LLC entities (the Maiden Lane Interests) through,
among other things, misrepresenting AIG’s ability and intent to repay amounts drawn on the FRBNY Credit Facility, and
misrepresenting the value of the securities that the Maiden Lane Interests acquired from AIG and certain of its counterparties.
The first amended complaint sought unspecified damages pursuant to the False Claims Act in the amount of three times the