AIG Sues Wall Street Firms In Attempt To Recoup Losses

Apr 29 2011 | 2:02pm ET

The American International Group is suing ICP Asset Management for $350 million, claiming the company harmed AIG by manipulating securities, and similar suits against Goldman Sachs and Bank of America are in the works.

AIG, which was bailed out by the U.S. government to the tune of $182 billion during the financial crisis, is claiming it suffered losses insuring mortgage securities created by ICP. According to a copy of the suit obtained by the New York Times, the giant insurer is trying to “recoup potentially billions of dollars from the fraudulent conduct of these defendants and other parties.”

The ICP suit also names Moore Capital, a New York hedge fund, which AIG says also benefited from the alleged manipulations, although Moore is not charged with fraud.

A person “with knowledge of the litigation” told the NYT that the decision to sue was all AIG’s, but as the company is still largely owned by the government, taxpayers would benefit from any funds recovered.

As part of the bailout deal, AIG waived its right to sue the banks over most of the mortgage securities it had insured but it retained the right to sue the managers that oversaw the complicated deals involving mortgage securities and complex financial contracts. AIG also retained the right to sue over the $40 billion in mortgage bonds it purchased from banks and which were responsible for much of its losses.

According to the Times, AIG’s future lawsuits will focus on what the insurer says are misrepresentations made by banks selling mortgage bonds. Besides BofA and Goldman Sachs, AIG may sue Morgan Stanley and Bear Stearns (now owned by JPMorgan Chase).

 


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.