Ohio Securities Case Widens To Include Losses In Housing Market

May 23, 2008 -- COLUMBUS – The Ohio Attorney General’s Office, which has been prosecuting a securities class action case against American International Group, Inc. (AIG) and 22 other defendants for more than three years, announced its intention to add claims relating to AIG’s recent multi-billion dollar write-downs stemming from its exposure to problems in the residential housing market.

Last week, the Ohio Attorney General asked the judge presiding over the case in New York federal court for permission to seek damages relating to the more than $20 billion in write-downs that AIG recently incurred from losses in its portfolio of credit default swaps, which are complex derivatives that insure against the risk of default on underlying bonds. The court has scheduled a hearing on the matter for June 3.

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The existing securities class action, which is being prosecuted by the Ohio Attorney General’s Office on behalf of the Ohio Public Employees Retirement System, State Teachers Retirement System and Ohio Police & Fire Pension Fund, has been pending since late in 2004. The suit seeks damages on behalf of a class of investors in connection with AIG’s involvement in a market division scheme with others in the insurance industry, and relating to AIG’s improper accounting for reinsurance and other transactions that led to the company’s $3.9 billion restatement of earnings in May 2005.

Those accounting problems led to the ouster of AIG’s then-Chairman and CEO, Maurice R. “Hank” Greenberg, and several other senior company executives. Mr. Greenberg, along with AIG’s current CEO, Martin J. Sullivan, are already named as defendants in the lawsuit.

Source: Ohio Attorney General