Wolf Popper LLP
Wolf Popper Defeats Motion to Dismiss in AIG II ERISA Litigation
Wolf Popper LLP Serves as Interim Co-Lead Counsel On Behalf Of Participants And Beneficiaries Of The AIG Incentive Savings Plan
The Honorable Laura Taylor Swain of the United States District Court for the Southern District of New York has appointed Wolf Popper LLP as Interim Co-Lead Counsel to prosecute an action brought under the federal pension law (the “Employee Retirement Income Security Act” or “ERISA”), on behalf of the participants and beneficiaries of the American International Group, Inc. (“AIG”) Incentive Savings Plan (the “Plan”), who held and/or purchased AIG stock (NYSE: AIG) in their Plan accounts.
A Consolidated Amended Complaint was filed on behalf of Plaintiffs and a proposed class of all persons (the “Class”) who were participants in or beneficiaries of: (1) the American International Group. Inc. Incentive Savings Plan; (2) the American General Agents’ & Managers’ Thrift Plan; and (3) the CommoLoCo Thrift Plan (collectively, the “Plans”) between June 15, 2007 and the present (the “Class Period”) and whose accounts included investments in AIG common stock. Plaintiffs allege that during the Class Period the Defendants breached their ERISA fiduciary duties by imprudently permitting the Plan to hold and acquire millions of dollars in AIG stock, despite the fact that they knew or should have known that AIG was engaging in highly risky business practices which artificially inflated the true value of AIG stock, and exposed participants and beneficiaries who relied on the Plan for their long-term retirement income to extraordinary and inappropriate levels of risk, making AIG stock no longer a prudent and appropriate investment for the Plan.
More particularly, Plaintiff alleges that Defendants breached their fiduciary duties by: (i) failing to prudently and loyally manage the Plans’ assets; (ii) failing to disclose necessary information to co-fiduciaries; (iii) failing to properly monitor the performance of their fiduciary appointees and remove and replace those whose performance was inadequate; (iv) failing to provide complete and accurate information to the Class about the risks of investing in AIG common stock; (v) failing to act loyally in the furtherance of their own personal interests at the expense of the best interest of the Plans; and (vi) failing to prevent breaches by other fiduciaries of their duties of prudent and loyal management, complete and accurate communications, and adequate monitoring.
The consolidated amended complaint was filed on June 26, 2009. Shortly, thereafter, Defendants filed motions to dismiss Plaintiffs’ consolidated amended complaint under Fed. R. Civ. P. 12(b)(6), and 12(b)1).
On March 31, 2011, Judge Swain denied in large part Defendants’ motions to dismiss the consolidated amended complaint. While the Court dismissed claims on behalf of the participants and beneficiaries of the CommoLoco Thrift Plan, the Court allowed the bulk of the claims on behalf of the participants and beneficiaries of the American International Group. Inc. Incentive Savings Plan and the American General Agents’ & Managers’ Thrift Plan to continue. In upholding Plaintiffs’ claims, Judge Swain stated “Plaintiffs have sufficiently alleged that AIG and the Director Defendants were aware of the increasingly risky financial position maintained by AIG, material weaknesses in AIG’s financial health and the potential impending erosion of the value of AIG's stock” and that “Plaintiffs have…sufficiently alleged that, had there been an investigation triggered by…[the warning signs alleged in Plaintiffs’ complaint]…, it would have demonstrated that AIG stock had become an imprudent investment.”
For more information contact Marian P. Rosner (mrosner@wolfpopper.com), or Andrew E. Lencyk (alencyk@wolfpopper.com)
Wolf Popper LLP Files Erisa Class Action Against American International Group, Inc.,
Wolf Popper LLP has filed a lawsuit in the U.S. District Court for the Southern District of New York on behalf of participants and beneficiaries of the American International Group, Inc. (“AIG”) Incentive Savings Plan (the “Plan”), for violations of the federal pension law (ERISA) in connection with the loss in value of AIG’s common stock [NYSE: AIG] acquired and held by present and former employees of AIG through the Plan. The goal of this litigation is to recover damages sustained by Plan and its participants and beneficiaries. The complaint can be viewed on Wolf Popper’s website or obtained from the Court.
According to Marian Rosner, who represents the Plaintiff, “the complaint alleges that AIG and the fiduciaries of the Plan have acted with disregard to their fiduciary duties under ERISA and once again employee retirement savings bear the brunt of the losses.”
The complaint alleges, among other things, that AIG, and certain of its officers and directors who are fiduciaries under the Plan, allowed the imprudent investment of the Plan’s assets in AIG common stock despite the fact that they knew or should have known that such investment was unduly risky and imprudent and that any reasonable fiduciary in possession of even some of the true facts extant at AIG during 2007 and 2008 would have avoided investment in AIG common stock and would have divested and/or hedged the AIG common stock in its participants’ portfolios. The complaint further alleges that from at least early 2007 through the present, AIG common stock has been an imprudent investment for the Plan because (1) AIG had over a half-trillion dollar exposure to the United States residential mortgage investment market which subjected AIG to the risk of massive losses of assets and stockholders’ equity; (2) AIG’s risk management systems were inadequate to allow management to track and hedge the foregoing risks; (3) AIG’s valuation system for its financial instruments was flawed and based upon estimates and estimating systems that were inconsistent with AIG’s information about real-world transactions in the same and similar instruments; (4) AIG’s accounting systems were fraught with material weaknesses that rendered the reports and valuations generated through those accounting systems inherently unreliable. In sum, AIG faced a dire financial crisis, which rendered AIG stock a seriously imprudent investment for the Plan and its participants. AIG’s and the fiduciaries’ alleged misconduct have caused the Plan to suffer losses of hundreds of millions of dollars.
Wolf Popper LLP has extensive experience representing shareholders, including retirement plan investors, in class actions, and has successfully recovered billions of dollars in securities actions. The firm currently serves as co-lead counsel in a class action ERISA lawsuit against Citigroup Inc., alleging similar claims to those alleged here against AIG. If you are a current or former employee of AIG, or a subsidiary of AIG, who held AIG stock through the Plan from May 11, 2007 to the present, and you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact attorney Marian Rosner toll free at 877/370-7703, or via email at irrep@wolfpopper.com.
CONTACT:
Wolf Popper LLP
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Tel.: 212.451.9635
Toll Free: 877.370.7703
Fax: 212.486.2093
Toll Free Fax: 877.370.7704
Email: irrep@wolfpopper.com
website: www.wolfpopper.com
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