AIG Ex Chief Maurice Greenberg Can Pursue a Lawsuit Against US.
The former chief of AIG, Maurice R. Greenberg, can pursue a lawsuit against the United States government over the financial crisis bailout of the insurer but in narrower form.
Mr. Greenberg can continue with claims that shareholders of A.I.G. lost tens of billions of dollars when the government attached onerous terms to the $182 billion rescue, Judge Thomas C. Wheeler of the United States Court of Federal Claims ruled on Wednesday.
But the judge threw out so-called derivative claims in which Mr. Greenberg sought to fight on behalf of his former company. In his ruling, Judge Wheeler said the board of A.I.G. had acted in good faith when it decided not to join the lawsuit earlier this year.
Mr. Greenberg, through his investment vehicle Starr International, has “failed to allege particularized facts that create a reasonable doubt as to the good faith or reasonableness of the board’s investigation of Starr’s demand,” the judge ruled, granting motions by A.I.G. and the government to dismiss the derivative claims.
At the same time, the decision leaves intact Mr. Greenberg’s direct claims against the government on behalf of himself and other shareholders, denying a motion by the government to dismiss those claims.
“We are pleased that the Court of Federal Claims has denied the motion of the United States and permitted Starr International to pursue the claims of two classes of A.I.G. shareholders for tens of billions of dollars that the government took without just compensation and/or illegally exacted in 2008 and 2009,” David Boies, the prominent trial lawyer representing Mr. Greenberg, said in a statement. “We look forward to continuing discovery in this action and getting ready for trial in the fall of 2014.”
Wednesday’s decision allows A.I.G. to distance itself from the lawsuit, which set off a storm of controversy when The New York Times reported in January that the board of the insurer was weighing whether to join it. Several lawmakers expressed alarm that A.I.G. might sue its savior.
After choosing not to join with its former chief, A.I.G. in April sought to bar Mr. Greenberg from suing on its behalf. The insurer said at that time that its directors “had every right to decide, in the exercise of their business judgment, that suing the government for its rescue of A.I.G. is not the right thing for A.I.G. to do.”
The essence of Mr. Greenberg’s claims against the government is that the A.I.G. bailout shortchanged investors and violated their Fifth Amendment rights. The Treasury Department has said that the claims “have no merit whatsoever, and we will continue to defend the case vigorously.”