The suit, In re American International Group Inc. 2007 Derivative Litigation, was brought against the directors by the Baton Rouge, La.-based Louisiana Municipal Police Employees' Retirement System pension fund on behalf of AIG. The derivative action alleges that the directors, who include former AIG Chief Executive Officer Robert Willumstad, ignored warnings of impending financial trouble between 2005 and 2008, and seeks a variety of remedies on behalf of AIG.
In a filing with the U.S. District Court for the Southern District of New York, the defendants claim the plaintiffs failed “to state a viable claim against the outside director defendants.”
“The thrust of the complaint against the outside director defendants is that, based on a series of supposed ‘red flags' between 2005 and early 2008, the outside director defendants knew about or recklessly disregarded the oncoming financial crisis and the devastating impact it could have on AIG but nevertheless voted to proceed with a stock repurchase plan, approve the payment of a shareholder dividend, and set various compensation and retirement packages for senior officers of the company,” the filing said.
In their filing, the defendants call the case “a schizophrenic securities fraud claim,” adding that “the claim that AIG committed securities fraud against itself is absurd on its face.”