AIG 2015 Annual Report Download - page 306

ITEM 8 / NOTE 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES
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Starr International Litigation
On November 21, 2011, Starr International Company, Inc. (SICO) filed a complaint against the United States in the United
States Court of Federal Claims (the Court of Federal Claims), bringing claims, both individually and on behalf of the classes
defined below and derivatively on behalf of AIG (the SICO Treasury Action). The complaint challenges the government’s
assistance of AIG, pursuant to which AIG entered into a credit facility with the Federal Reserve Bank of New York (the FRBNY,
and such credit facility, the FRBNY Credit Facility) and the United States 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.
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 due to our Board’s refusal of SICO’s demand and denied the United
States’ motion to dismiss SICO’s direct, non-derivative 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 (the Credit Agreement Shareholder
Class); 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 (the Reverse Stock Split Shareholder Class). 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.
On June 15, 2015, the Court of Federal Claims issued its opinion and order in the SICO Treasury Action. The Court found that
the United States exceeded its statutory authority by exacting approximately 80 percent of AIG’s equity in exchange for the
FRBNY Credit Facility, but that AIG shareholders suffered no damages as a result. SICO argued during trial that the two
classes are entitled to a total of approximately $40 billion in damages, plus interest. The Court also found that the United
States was not liable to the Reverse Stock Split Class in connection with the reverse stock split vote at the June 30, 2009
annual meeting of shareholders.
On June 17, 2015, the Court of Federal Claims entered judgment stating that “the Credit Agreement Shareholder Class shall
prevail on liability due to the Government's illegal exaction, but shall recover zero damages, and that the Reverse Stock Split
Shareholder Class shall not prevail on liability or damages.” SICO filed a notice of appeal of the July 2, 2012 dismissal of
SICO’s unconstitutional conditions claim, the June 26, 2013 dismissal of SICO’s derivative claims, the Court’s June 15, 2015
opinion and order, and the Court’s June 17, 2015 judgment to the United States Court of Appeals for the Federal Circuit. The
United States filed a notice of cross appeal of the Court’s July 2, 2012 opinion and order denying in part its motion to dismiss,
the Court’s June 26, 2013 opinion and order denying its motion to dismiss SICO’s direct claims, the Court’s June 15, 2015
opinion and order, and the Court’s June 17, 2015 judgment to the United States Court of Appeals for the Federal Circuit.
On August 25, 2015, SICO filed its appellate brief, in which it stated SICO does not appeal the dismissal of the derivative
claims it asserted on behalf of AIG. On December 7, 2015, the United States filed its principal and response brief.
In the Court of Federal Claims, 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.