consumer protection, false claims act

AIG To Pay $40 Million In Pension Plan Class Action Settlement

American International Group Inc. (AIG) will pay $40 million to settle proposed class action litigation alleging that the insurer’s employee pension plans improperly invested in its own poorly performing stock following the 2008 mortgage crisis. The settlement would pay beneficiaries of the plans from August 2007 to May 2009, who according to the motion seeking preliminary approval, are on board with the settlement.

The Plaintiffs had been seeking up to $300 million in damages based on the 2007 to 2009 time period, but a more realistic damages period might have started in February 2008, according to the motion filed with the Court. That would put the plans’ maximum potential losses at about $205 million. The settlement, if approved, would represent only 20 percent of the total possible damages. The Plaintiffs said in the motion:

In plaintiff’s view, this case presents a colossal failure by the plan’s fiduciaries to protect the participants from massive losses that occurred. Nonetheless, plaintiffs recognize that liability is not automatic.

The class action, consolidated in 2009, claimed that the Defendants breached their fiduciary duties by encouraging employees to invest in AIG stock through pension plans, while the company invested heavily in the disastrous subprime mortgage market that led to its near collapse.

The suit alleged that the Defendants breached their duty to manage and administer the plans — and the plans’ investments — in the sole interests of beneficiaries, by continuing to invest in AIG stock as it declined in value. Despite early concerns that the bottom would fall out of the market, the nation’s largest insurer continued to integrate subprime mortgages into its business model during the class period, assuring investors that it would not be adversely affected by its exposure to the looming credit crisis, the Plaintiffs claimed.

Source: Claims Journal

Free Case Evaluation

Since 1979, Beasley Allen has been committed to “helping those who need it most.” Our attorneys have helped thousands of clients get the justice they desperately needed and deserved. You pay us nothing if we do not win for you. Contact us today for a free case evaluation.

For Disclaimers, see our Terms of Use.

Free Case Evaluation Full - Updated

"*" indicates required fields

This field is for validation purposes and should be left unchanged.