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.”