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Member, Beacon International Group, Ltd.
NEW YORK—A New York federal judge has dismissed some claims against American International Group Inc. related to losses sustained by its employee pension plans, but also refused to dismiss others.
Defendants in the suit, In Re American International Group, Inc. ERISA Litigation II, include AIG and 59 individuals, including former CEOs Martin Sullivan and Robert Willumstad.
While U.S. District Court Judge Laura Taylor Swain on Thursday dismissed some allegations in the lawsuit, other charges she refused to dismiss include misrepresentation or omission to plan participants, duty of prudence and duty to monitor, among others.
Five of the six plaintiffs were participants in the AIG Incentive Savings Plan. The judge dismissed all claims regarding a plan covering employees in Puerto Rico, finding the plaintiffs had no standing to sue.
In her ruling on the misrepresentation claim, the judge said the plaintiffs “have adequately alleged that defendants failed to disclose the true extent of the risk facing AIG as a result of its financial decisions and the decline of the residential housing market, and that defendants affirmatively misrepresented the strength and extent of the processes AIG had in place to mitigate this risk.”
In addition, had the defendants “informed plaintiffs of the alleged overvaluation of AIG stock, plaintiffs might have sought to challenge the past and ongoing use of AIG stock to satisfy the employer-contribution matching obligation” to the employee pension plans, according to the ruling.
Reacting to the judge’s decision, an AIG spokesman praised dismissal of some of the allegations. “We're pleased the court dismissed portions of the case and will defend vigorously against the remaining claims,” the spokesman said in a statement.
American International Group Inc., New York, expects to contribute about $600 million combined to its U.S. and worldwide pension plans in 2009, according to its annual report filed Monday with the SEC.