Contact Information: CONTACT: Bernstein Litowitz Berger & Grossmann LLP Gerald H. Silk 212-554-1400
Expanded Securities Class Action Suit Filed Against American International Group, Inc. and Certain of Its Senior Executives, Announces Bernstein Litowitz Berger & Grossmann LLP
NEW YORK, NY--(Marketwire - June 19, 2008) - Bernstein Litowitz Berger & Grossmann LLP
today announced that it has filed a securities class action lawsuit against
American International Group, Inc. ("AIG" or the "Company") (NYSE : AIG ) and
certain senior executives in the Southern District of New York on behalf of
Ontario Teachers' Pension Plan Board ("Ontario Teachers") and similarly
situated investors in AIG securities during the period of November 10, 2006
through June 6, 2008 (the "Class Period"). The action is captioned Ontario
Teachers' Pension Plan Board v. American International Group, Inc., et al.,
No. 08-CV-5560.
The case was filed as a related action to Jacksonville Police and Fire
Pension Fund v. American International Group, Inc., No. 08-CV-4772 (RJS),
the first-filed securities class action in this matter, which is presently
pending before the Honorable Richard J. Sullivan. Investors should note
that the Ontario Teachers action expands the class period alleged in the
Jacksonville action. We direct all interested investors to the notice
published on May 22, 2008 in connection with the filing of the Jacksonville
action pursuant to the Private Securities Litigation Reform Act of 1995.
As set forth in that notice, investors wishing to serve as the lead
plaintiff are required to file a motion for appointment as lead plaintiff
by no later than July 21, 2008.
The Complaint alleges that during the Class Period, AIG and the individual
defendants -- former Chief Executive Officer Martin J. Sullivan, former
Executive Vice President and Chief Financial Officer Steven J. Bensinger,
Senior Vice President and Chief Risk Officer Robert Lewis and Joseph
Cassano, the former head of AIG subsidiary American International Group
Financial Products ("AIGFP") -- violated the federal securities laws by
issuing false and misleading press releases, financial statements, filings
with the SEC and statements during investor conference calls. As alleged
in the Complaint, throughout the Class Period, Defendants overstated the
Company's earnings and financial position while repeatedly reassuring
investors that AIG had successfully insulated itself from the turmoil in
the housing and credit markets due to its superior risk management. In
particular, defendants touted the value and security of AIGFP's "super
senior" credit default swap ("CDS") portfolio, making numerous statements
that this portfolio was secure and that AIG's method for accounting for the
valuations of this portfolio was proper.
Investors began to learn the truth regarding AIG's financial condition and
the Company's exposure to the mortgage market when, on February 11, 2008,
the Company disclosed that its outside auditor had determined that there
was a "material weakness in its internal control" over the financial
reporting and oversight relating specifically to its accounting for the CDS
portfolio, and that the Company was revising the loss valuations it
previously reported. Under the new valuations, losses on the CDS portfolio
more than quadrupled -- from the $1.4 billion reported on the CDS portfolio
just weeks before to over $4.5 billion. Two weeks later, on February 28,
2008, AIG disclosed that the market valuations on the CDS portfolio would
increase to $11.5 billion and revealed for the first time that the Company
had notional exposure of $6.5 billion in liquidity puts written on
collateralized debt obligations ("CDOs") linked to the subprime mortgage
market. Then, on May 8, 2008, the Company disclosed that market valuation
losses on the CDS portfolio for the quarter climbed an additional $9.1
billion, for a cumulative loss of $20.6 billion, and that the Company was
expecting actual losses on the portfolio to be about $2.4 billion. On June
6, 2008 the Company disclosed investigations by the Securities and Exchange
Commission and the U.S. Department of Justice concerning AIG's accounting
and financial disclosures with respect to its CDS portfolio. As a result
of these disclosures, the price of AIG stock plunged from a Class Period
high of $72.81 per share on December 18, 2006, to $33.93 per share on June
6, 2008, wiping out tens of billions of dollars in shareholder value and
causing damage to the class.
The Complaint asserts claims against all defendants under Section 10(b) of
the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5
promulgated thereunder, as well as claims against defendants Sullivan and
Bensinger under Section 20(a) of the Exchange Act.
This case is filed as a separate case from a preexisting securities class
action in the Southern District of New York arising from allegations
concerning undisclosed bid-rigging and improper reinsurance transactions.
That action, filed in 2004 and presently pending before the Honorable John
E. Sprizzo, is captioned In re American International Group, Inc.
Securities Litigation, No. 04-CV-8141 (JES) ("AIG I"). The lead plaintiff
in the older AIG I action has sought leave to amend the action to encompass
the allegations and time period at issue in the Jacksonville and Ontario
Teachers actions. Ontario Teachers, which has suffered significant
financial losses as a result of the alleged wrongful conduct that is the
subject of the Jacksonville and Ontario Teachers actions, believes that
these actions are and should remain separate from the AIG I action and that
the interests of class members would be prejudiced by the proposed
amendment of the AIG I action. Ontario Teachers intends to oppose any
effort to amend AIG I to subsume the new actions into the older case.
Ontario Teachers is the largest single-profession pension plan in Canada,
with over US$100 billion in assets. Ontario Teachers invests the pension
fund's assets and administers the pensions of over 278,000 active and
retired Ontario teachers. Ontario Teachers has significant experience
serving as a lead plaintiff in securities class actions, including in In re
Nortel Networks Corporation Securities Litigation, No. 05-MD-1659 (LAP)
(S.D.N.Y.), in which a settlement worth over $1.3 billion was obtained for
investors, and In re Williams Securities Litigation, 02-CV-72 (N.D. Okla.),
which settled for $311 million shortly before trial.
The Ontario Teachers action is being investigated and prosecuted by
Bernstein Litowitz Berger & Grossmann LLP and its subprime litigation
group. The subprime litigation group is also representing investors in
class and derivative subprime-related actions against Washington Mutual,
Inc., American Home Mortgage Investment Corp., New Century Financial
Corporation, Countrywide Financial Corporation and State Street, among
others. More information about Bernstein Litowitz Berger & Grossmann LLP
can be found online at www.blbglaw.com.