Reuters reports that District Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York accepted AIG’s argument that the shareholders failed to make a demand upon the insurer’s board of directors prior to bringing their lawsuit, or adequately allege why such a demand would have been futile. The lead plaintiff in the case was the Louisiana Municipal Police Employees’ Retirement System.
The complaint accused AIG officials of ignoring the potential for catastrophic losses stemming from exposure to credit default swaps through the company’s financial services unit. These losses led to roughly $180 billion of bailouts that left the federal government with close to an 80% stake in AIG, according to Reuters. The firm has been selling assets to repay the government.
The case is In re: American International Group Inc. 2007 Derivative Litigation, U.S. District Court, Southern District of New York (Manhattan), No. 07-10464.
Last month AIG agreed to pay $8 million to settle a lawsuit over losses to the Oregon Public Employees Retirement Fund (see AIG Settles with Oregon Pension Fund).
The Louisiana Municipal Police Employees’ Retirement System has been very busy the past two years pursuing amends for wrongs it has allegedly suffered. The pension fund obtained a $150 million settlement of a class-action lawsuit accusing Merrill Lynch of lying to investors about the sale of its bonds and preferred stock (see BofA Settles Merrill Fraud Suit for $150M).In addition, the retirement system has filed suit against Regions Financial Corp. over alleged actions during its acquisition of AmSouth Bancorp (see Louisiana Pension Fund Sues Regions Financial), challenged a $75-million 2008 bonus given to Chesapeake Energy CEO Aubrey McClendon (see Two Pension Plans Challenge Energy Firm CEO Bonus), and investigated possible stock options backdating by Countrywide Financial (see Pension Fund Wins First Court Round in Options Backdating Probe).
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